SaaS revealed!

With SaaS, a vendor provides maintenance, technical operations and support of commercial or specially designed applications for its client. The SaaS provider typically hosts the software at its facilities and offers a flexible subscription pricing plan, usually as a monthly fee or on a pay-as-you-use basis. Organizations do not have to buy, install or maintain software or hardware because they access applications via the Internet from their desktop PCs or mobile devices.

The goal is to allow organizations to quickly implement business applications, letting them avoid large infrastructures and ongoing administrative costs.

This approach might sound familiar. It was a model followed by application service providers during the 1990s, when they provided services and third-party applications to users over a wide-area network from a central data center.

But ASPs never really caught on because the providers offered a diverse set of applications that required heavy customization for each user, said David McQueeny, IBM vice president and chief technology officer at its U.S. federal government unit. “That’s not really efficient.”

SaaS providers generally develop software that doesn’t need a lot of customization, and a wide range of industries can use the applications.

At the moment, the two hot areas for SaaS are customer relationship management (CRM) and human resources management software, said Mike Mankowski, an analyst at Tier 1 Research. These are horizontal-type applications that can be applied across diverse businesses or government agencies.

“SalesForce.com is the 800-pound gorilla,” in CRM, Mankowski said. Other vendors include RightNow Technologies, which offers a hybrid of on-demand and on-premise CRM software, and Taleo, a maker of talent management software.

Industry analysts anticipate steady growth in the sector during the next few years. For instance, market researcher Gartner predicts that 25 percent of new business software will be delivered as SaaS by 2011. Traditional software providers such as IBM, Microsoft and Oracle have entered the fray.

The Defense Information Systems Agency selected IBM Global Services last year to provide network-centric collaboration services that will be delivered through an on-demand model. Meanwhile, Oracle provides a portfolio of applications to business and government clients on a subscription or managed basis through Oracle On-Demand.

More news on related topics: IT Management, Software Applications, Workflow / Collaboration