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What is SaaS in Cloud Computing?

12 of 17 in Series: The Essentials of Services in Cloud Computing

Today, Software as a Service (SaaS) is the most mature area of cloud computing. SaaS gained initial traction with the customer relationship management (CRM) market and has expanded into others — particularly the collaboration market and the enabling tools and management environments.

What characteristics have to be in place for an SaaS to be commercially viable?

  • The SaaS application needs to be generalized enough so that lots of customers will be interested in the service. Here are some examples of these types of applications: accounting, collaboration, project management, testing, analytics, content management, Internet marketing, risk management and of course, CRM. What doesn’t work as SaaS? A specialized one-of-a-kind application with a small number of potential customers.

  • SaaS applications need sophisticated navigation and ease of use. If an SaaS application isn’t easy to use, customers will simply stop subscribing. Most SaaS vendors offer prospective customers a free trial for a month or so. If the customer doesn’t start using the application during that first month, it's likely that the customer won’t sign a contract. This is really important because it has been reported that less than 20 percent of users remain customers after the first month or so.

  • The SaaS application needs be modular and service oriented. Without this modular approach, it will be hard to change and difficult to have third-party independent companies join the ecosystem.

  • An SaaS application needs to include measuring and monitoring so customers can be charged actual usage.

  • An SaaS application must have a built-in billing service.

  • SaaS applications need published interfaces and an ecosystem of partners who can expand the company’s customer base and market reach.

  • SaaS applications have to ensure that each customer’s data and specialized configurations are separate and secure from other customers' data and configurations.

  • SaaS applications need to provide sophisticated business process configurators for customers. Each customer can change the process within the standardized SaaS application. For example, a company might want to add a process so a manager has to approve the price being offered to a new customer. A built-in configuration tool enables this to be done on an ad hoc basis without programming.

  • SaaS applications need to constantly provide fast releases of new features and new capabilities. This must be done without impacting the customer’s ability to continue business as usual.

  • SaaS applications have to protect the integrity of customer data. That includes providing techniques for allowing data to migrate either to a private database inside the firewall or to a third-party storage capability.

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