In the software industry software as a service (SaaS), is an emerging business model that has attracted interests of a number of consumers in the global market. SaaS model works on the same principles like the application service provider model and it has been found that SaaS can provide software to user’s laptops and computers for application processes. Further studies have revealed that the emergence of SaaS has been brought about by the development of the internet know-hows, since these technologies acts as the founding stone for the SaaS business model as well as the main driver and propelling factor in the adoption of the SaasS technology (Kaplan, 2007), in the Business Communication Review Journal.
SaaS service is growing so fast to the extent that many organizations are now subscribing to save on the expenses that would otherwise have been used in the information technology investment particularly on personnel, software, hardware, networking and infrastructure. Conversely SaaS providers are tasked with the duty of outsourcing venders who charge a monthly fee for their contracting service to the clients. In the outsourcing agreement, the SaaS providers are tasked with the responsibility of offering all the SaaS services like the customization and updating and frequent application software’s maintenance.
IT investment is arguably the most expensive investment in the business world since it costs a big portion of the corporate budget. However, many companies have managed to reduce the cost by adopting the existing outsourcing models. However, outsourcing by most of the domestic companies led to the dramatic global economic change and the shift in the job market. This in return made many affected people to be against outsourcing, but SaaS as a business model is quite simple and very easy to use than the traditional IT outsourcing practice. This has been realized and implemented by the outstanding IT companies like Oracle, IBM and Microsoft.
Moreover SaaS is able to impact these software industries and it influences the way a customer gets business functionality and solutions. And SaaS takes a subscription model where the customers do not gain full control or ownership of the software but instead rents total solution which is remotely delivered. Therefore with the SaaS applications businesses are in a position to reduce up-front support costs since there is no need of supporting multiple platform and versions. Consequently SaaS enables developers to use a single version of a product to assist many customers and in the end it simplifies deployment and assist customers in lowering the acquisition cost. Thus, SaaS as a business model is capable of using internet channels and networks to provide internet based software applications to customers within the software industry. However, there is a question-Can SaaS cut on the cost of the IT Department? which is unanswered and pondered by many.
The benefits’ of the IT department are numerous for every company as it put the company on a very competitive edge, thus contributing to the company’s competitive advantage. This makes it mandatory for these companies to bear the burden of the expenses that are brought about by the information technology. Since maintaining updated information systems is very expensive for most of these companies, they are usually on the lookout for alternative ways of upgrading the information. Thus the adoption of the up to date and manageable outsourcing models like SaaS makes it possible and easy to reduce the operational costs, reduce IT infrastructure complexity, system agility, strict security and sound return on investment. This is possible since, the SaaS users can rent only the applications that their business needs and minimize on the traditional IT costs and expenses such as expenses on IT professionals, purchasing and maintaining hardware, infrastructure and software. In addition SaaS has got a global outsourcing possibility of allowing the SaaS vendors to do business oversees due to the advancement of technology, thus it help cut on the cost and expenses of the IT department.
I agree that SaaS is geared towards a specific business with numerous benefits which make it possible to work in many settings as outlined in the article, but just like many critics of SaaS I am also concerned with the many requirements that are needed in order to start SaaS and these makes it undesirable for some businesses. For instance SaaS needs a powerful connection since it is an online application that loads everything in the browser, but the rate of connection is not the same in every region and this makes it undesirable in the regions with weak internet connection. In addition, SaaS has got increased security risk and there is a strong likelihood that it will experience more attacks than other platforms since it consistently interacts with many users. Another serious challenge that makes SaaS undesirable is the load balancing which means that businesses that must be consistently monitored. In deed the above challenges have made many people to be worried and coy on SaaS (Kaplan, 2007).
In conclusion, the article has pointed at the many promises of SaaS, although those promises are being hampered by the industry hype and sensationalism which must be addressed to make SaaS a success for all the businesses. Once these challenges are addressed, I have to admit that SaaS will change the acquisition and distribution of the information technology applications from the current procurement and ownership model which is very costly to the subscription and outsourced services with lots of ease.
Kaplan J.M. (2007). SaaS: friend or foe? Business Communication Review, June, pp. 48-53.
