Software as a Service (SaaS)
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Software as a Service (SaaS). Sheila Brisland Product Manager Agenda. Introduction What is Saas? Some examples The market Architectures Implications for the buyer Implications for the service provider Questions. Introduction. Who are Sage?

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Sheila brisland product manager sheila brislandsnowdrop

Software as a Service (SaaS)

Sheila Brisland

Product Manager


  • Introduction

  • What is Saas?

  • Some examples

  • The market

  • Architectures

  • Implications for the buyer

  • Implications for the service provider

  • Questions


  • Who are Sage?

    • Business management software

    • Worldwide turnover 1,157.6m (2007)

    • Worldwide employees - 13900

    • UK turnover 217.7m (2007)

    • UK employees - 1800

    • The only remaining FTSE 100 technology stock

  • Who are Snowdrop?

    • HR and payroll software and services

    • Companies with 100+ employees

    • UK employees - 200

Saas definition
Saas definition

Software as a service is a software application delivery model where a software vendor develops a web-native software application and hosts and operates (either independently or through a third-party) the application for use by its customers over the Internet. Customers do not pay for owning the software itself but rather for using it. They use it through an API accessible over the Web and often written using Web Services or REST.

Wikipedia 2008

Saas definition1
Saas definition

Software that is:

  • Owned, delivered and managed remotely by one or more providers

  • The application is based on a single set of common code and data definitions

  • It is consumed in a one-to-many model by all contracted customers

  • It uses a pay-for-use model or a subscription model based on usage metrics

    Gartner Group 2008

Saas definition2
Saas definition

Software applications hosted on remote servers and made available to end users via a Web browser and on a subscription-based business model

Key characteristics:

  • Network based access and management

  • Activities managed from a central location, enabling users to access applications remotely via the web

  • Applications delivery closer to one-to-many model (multi-tenant architecture) including architecture, pricing, partnering and management characteristics

    Sage Group 2007

Saas is not
Saas is not:

  • Outsourcing - utilising any external agency or organisation to fulfil an element of business management, for instance to man a call centre or run a company’s payroll

  • Hosting – provision of access to software installed remotely, probably including data management

The saas market1
The SaaS market

  • Adoption of SaaS varies widely across software markets:

    • As little as 1% of total software revenue in some markets and more than 75% in others

  • Adoption is highest in applications that support:

    • simplified, common business processes or

    • large, distributed virtual workforce teams

  • On-premise sales growing in single figures (9%)

  • SaaS sales growing in double figures (22%)

    Gartner 2007

Saas stack

SaaS Applications

Presentation Frameworks

Metering &



& Provisioning




Indexing, App servers, Mobile support

Hardware, Hosting and IT Support

SaaS stack

Factors driving adoption
Factors driving adoption

  • A shortage of skilled professional resources, within internal IT departments and system integrator organisations

  • Painful reminders of lengthy, unsuccessful deployment cycles spur buyers to investigate simpler, quicker alternatives

  • Increasing familiarity with the Internet, improvements in security and an increase in broadband availability

  • The benefits of rapid deployment, less upfront capital investment and a decreased reliance on limited implementation resources

  • Responsibility for continuous operation, backups, updates and infrastructure maintenance shifts to vendors or service providers

  • Line-of-business ownership reduces dependency on internal IT

Market inhibitors
Market inhibitors

  • Concerns about data security and critical customer information

  • Initial investment costs required to create an on-demand infrastructure environment restrict new market entrants

  • Investments in applications, capital and organizational expertise limit growth

  • Complex process requirements constrain adoption of simplified, standardized solutions

  • Regulations governing data privacy and protection vary by country and may restrict adoption of some vendors' solutions in certain areas

  • An inability for vendors to shift to a service-based model for either architectural or cultural reasons

Buyer benefits
Buyer benefits

  • Low cost infrastructure

  • Low cost of entry & ownership – subscription model

  • Rapid deployment

  • Simplified configuration & customization tools

  • No ongoing resource requirements for back-end system management

  • Access from anywhere - ideal for distributed workforce

  • Creates environment allowing collaboration between many different parties

  • Upgrades are included and regular

  • Lower switching costs

  • Experimentation with emerging technologies is less risky

Buyer issues
Buyer issues

  • Integration requirements with existing applications

  • Security of data

  • Lack of competitive differentiation

  • Less ability to negotiate customized contracts

  • Weakened IT management control

  • More basic functionality in some cases

  • New vendor management skills required

Service provider benefits
Service provider benefits

  • Low initial cost for users makes buying cycle short

  • Getting customers to add more users and buy access to more functionality later is easier

    • Can start with a simple application

  • Leveraging the "long tail”

    • you can service more smaller customers that are unreachable at traditional price/performance ratios SaaS thus should feature less complexity at a lower price, offered to large numbers of prospects

  • No need to support many older versions

  • Growing market

Service provider issues
Service provider issues

  • For existing software houses:

    • Organizational implications of moving from a product-centric to a service-centric delivery model

    • Beware cannabilising the on-premise market

  • For start-ups:

    • Cashflow develops over time – building a business is hard

  • For both:

    • Strong incentive to make adoption as viral as possible – so usability is key

    • Reliability of hosted service is critical

Session summary
Session Summary

  • SaaS is a growing market

  • Most suitable for supporting simpler processes

  • Good for distributed processes

  • Risky revenue model for start-up businesses

  • Good for ‘long tail’ markets