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The benefits of SaaS: Is software as a service your pot of gold?

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In the context of this blog post, we can consider software as a service as a new way to deliver application functionality to a customer through a subscription model over the Internet.

In this model, customers do not take ownership of the software or hardware but rather “subscribe” to a total solution that is delivered remotely. It represents a significant change in the way that independent software vendors (ISVs) are doing business today!

In the traditional (on-premises) software delivery, a customer usually:

• Pays up-front for hardware, software license and air conditioning
• Pays for software subscription and support (monthly or annual fees)
• Defines and manages the IT infrastructure environment
• Defines and manages the middleware and software environment
• Is only responsible for all IT processes (availability management, capacity management, release and deployment management, change management)
• Is responsible for accomplishing the service level agreement (SLA) in daily operation
• Is responsible for upgrading the software as vendors issue new releases
• Is responsible for customizing software to business requirements

On the other hand, in a SaaS delivery model we face a completely different scenario:

• Customer fees that are “pay as you go” based on appropriate metrics, such as per user per month, per transaction, reserved capacity packages, flat monthly fee
• The provider is responsible for defining and managing the IT infrastructure environment
• The provider is responsible for defining and managing the middleware and software environment
• The provider is responsible for the major IT process (availability management, capacity management, release and deployment management, change management)
• The provider is responsible for accomplishing the SLA
• The provider upgrades the software as new features are developed
• The customer is responsible for configuring software to business requirements

With that in mind, you can assume that there are a great number of customers that are willing to move to a SaaS model as soon as possible.

It is true! What I am hearing from different ISVs that I have relationships with throughout Brazil is that their clients are asking them to move to SaaS models. These ISVs are looking for IBM to help them to deal with this market shift. IBM has more than . IBM has more than 100 SaaS applications for a variety of business sizes and needs.

Here I put together some considerations that you should be aware of when crossing the bridge to the SaaS world:

• Am I prepared to be a service company?
• Do I have a reliable business case justifying the venture?
• How will the SaaS model impact my revenue?
• Do I need to change my software architecture?
• Do I need to change my development processes?
• What service delivery capabilities do I need?
• How do I address integration, data migration and related services?
• What are the operational requirements?
• Can I automate key supporting functions?
• What business processes must change?
• Do I need to change how I go to market?
• What’s the right target audience for my service?
• How should I reward my sales force?
• Am I prepared to meet strict security requirements?
• Am I prepared to provide capabilities like subscription management, metering, billing, near real-time usage monitoring, entitlement management and other system management functionality?

And last, but not least:

• Is it possible to do everything by myself or should I look for a reliable partner to help me succeed?

The benefits of SaaS are clear, but it is not risk-free path. After all, transforming an existing on-premises application into reliable, scalable software capable of supporting many customers simultaneously is not a small thing.

There are both technology and business challenges, but the latter is always the hardest part of the transformation. For the ISVs, the move to SaaS directly addresses the heart of what it means to run a software business.

If you work carefully on each one of the items described above, I am quite sure you will find a pot with lots of gold at the end of the rainbow!

I would like to hear from you. Do you believe it is possible to find a pot of gold? Comment below, or connect with me on Twitter @WilsonTM_JR.

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