SaaS The Way Forward

Date:   Friday , April 02, 2010

Gartner saw it as the one bright spot during recession. Traditional software is slowly but steadily making way for it. And India is estimated to register a 60 percent Compound Annual Growth Rate (CAGR) in it from 2008 to 2012 according to Springboard Research. Software-as-a-Service (SaaS) has taken the IT world by storm and experts say this is just the beginning.

As the IT industry has matured, IT organizational focus has steadily shifted from capabilities to outcomes. Leading organizations are primarily focussed on processes and information, not technology, applications or infrastructure. In this context, IT is simply a means to an end, not an end in itself. In other words, the 'service' being consumed is ultimately all that matters from a business standpoint and all underlying enabling technology is simply part of the plumbing. SaaS and cloud computing, though only a part of a larger canvas, are seen as the most obvious examples of this trend.

SaaS is a big hit in India, being the fastest growing SaaS market in Asia Pacific and is projected to be worth 352 million dollars by 2012. The growing appeal of SaaS in India is also evident from the fact that SaaS familiarity levels in India are much higher than in the Asia Pacific region as a whole, where only 60 percent of respondents reported being 'very familiar with SaaS', as compared to 74 percent in India according to Springboard Research.

So what is it that makes SaaS a thriving model? Michael Barnes, VP of Software & Asia Pacific Research, Springboard Research, feels that the severe resource constraints that most organizations are facing have facilitated its popularity. "Demand for process improvements, new business capabilities (application functionality) and information access remains as strong as ever. SaaS solutions are a perfect fit as they require minimal up-front investments (Cap-Ex), minimal user training, and in many cases minimal involvement of the actual IT department itself."

Low maintenance and ease of use are cited as the main reasons for extensive SaaS adoption apart from elasticity, high operational efficiency and scalability. SaaS users also enjoy rapid deployment with anytime, anywhere access and automatic upgrades and updates. SaaS has been adopted mostly by enterprises that are in high growth sectors like power, infrastructure, contact centers, banking, and technology. With its increasing popularity, SaaS is witnessing a number of innovations. Asheesh Raina, Principal Research Analyst, Gartner sees light weight, fast over the net and quick customization applications to watch out for. "The eco-system will become stronger as even smaller companies are moving into the subscription mode. In totality, everything is turning into a service," he adds.

Bangalore based Wolf Frameworks has put the platform to interesting use. It recently developed a SaaS solution - Census Information Management Solution (CIMS) for SEDS, an NGO working extensively in Andhra Pradesh's Ananthpur district. CIMS is a customized web based SaaS solution that captures SEDS' data and generates analytical reports. CIMS allows SEDS to collect and relate-consolidate data into a central repository and automates the process of data analysis, presenting reports and charts on different metrics and also generates a Unique Identification Number which helps to locate and track individual data. The application imports previous data records of five years maintained in Microsoft Access Databases and spreadsheets. Using this application, SEDS has profiled and generated unique identification numbers for more than 40,000 members in the district.

Synage's DeskAway, a web-based project collaboration service that provides teams a central location to easily organize, manage and track their projects and work is another widely used application. NASSCOM touted SaaS for mobile phones as the future trend as applications are taking over the medium. However, in the present context, Narasimhan (Kishore) Mandyam, CEO, Impel CRM sees it as a distant dream. "Network access is spotty, user experience is ambivalent at best and anyway, people who access Mobile Internet with a fancy phone are too small a group to call it a SaaS market. It will happen, maybe in conjunction with 4G. In the meantime, there is SaaS-via-SMS in non-American markets," he says.

SaaS has often been seen as an alternative to outsourcing. Barnes begs to differ and terms these approaches as alternatives to each other as their primary function is to minimize the cost and effort required to maintain internal IT infrastructure. He foresees the two co-existing to augment more traditional on-premise software deployments and application hosting, particularly in large organizations.

Security concerns run high for this model as often, the service providers belong to a third party. Though he agrees that the concern is justified, Raina feels that it is not an issue technically speaking as even RBI sites get hacked. "Many standards are evolving around Cloud Computing security but essentially data protection is the biggest area," says Sunny Ghosh, CEO, Wolf Frameworks. It is expected that far more emphasis will be given to regulatory compliance considerations and process visibility issues, particularly where a business process cuts across multiple, hybrid Cloud-based platforms that may include some combination of vendor-provided public Clouds, including SaaS solutions and an internally managed private Cloud. Synage's Founder and CEO Sahil Parikh says, "Consumers need to come to terms with the fact that their data is more secure with the SaaS vendor than behind their office walls. Security and data protection are closely tied to the SaaS vendors' business model and hence they take adequate steps to ensure that customer data is secured- both from the infrastructure as well as the application layers."

All said and done, the future of software is SaaS, or so it seems to the industry. Gartner has predicted that 25 percent of new business software will be delivered as SaaS in 2011. The rent-on-need mode of business with the option of suspension of investment, usability for peak loads and absence of maintenance costs are what Raina cites as the factors that make SaaS lucrative. He is careful to add that SaaS is not for everyone, a fact that needs to be internally reconciled.

"All software will not become SaaS-only, but I do believe that in five years or so, over 75 percent of all business software used will be of the SaaS variety and I bravely include 'productivity apps' like Office in there," Kishore says confidently. "Honestly, asking what's in future for SaaS is like asking 'what's the future of the Internet' back in 1995. Yes, even today, there are a few things that you can do without the Internet. And there are a few things that you can do better without it. But by and large, you can't live without it. That's the future of SaaS too," he adds.