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What’s this Software as a Service (SaaS) all about? A layman’s view and implications for Technical Professionals

Estimated reading time: 3 mins

Many of you might know about Software as a Service (SaaS). It is a growing industry within IT, and based around (what might be to some) a simple concept. That is, software isn’t owned, but rented; not installed, but accessed; it’s not paid for upfront, but pay-as-you-go. You could liken it to watching TV rather than playing a DVD. Or it’s like using power from the grid rather than having your own generator. SaaS means you use software as a consumer and have very little control of it’s deployment, which is attractive for it’s customers. It’s sold as being ‘IT-less’ – in other words you don’t need servers and stuff like that.

In this model, software is made available over the Internet rather than installed on your PC (or Mac, or whatever you use… and I’ll come to that). The difference between SaaS and the ASP (Application Service Provider, not Active Server Pages) model is that SaaS is sold by software vendor’s rather than by third-party hosts. The technical reason is because the software is built specifically for SaaS applications, unlike the majority of ASP applications. From a commercial point of view, it means software companies get all the pie rather than just a majority slice.

SaaS is really commercially driven. It means that software companies can get your cash repeatably on a subscription basis rather than just an initial license fee. It also means they can ensure that customers are always on the latest version of the software to show off their latest bells and whistles and keep competitors at bay.

As I said earlier, SaaS is supposedly IT-less. But thats really a fallacy as you need a capable Internet connection that can support your existing usage plus that absorbed by the application. It also means you’ll probably need very capable firewalls, client-side security software and proxies (but you should already have those anyway!) Oh and you still need client machines to access the software, but one of the benefits is that SaaS applications are ‘client-agnostic’, in other words, it doesn’t matter if your organization standardizes on Windows, Macs, Linux – it’s up to you. But it’s not quite IT-less.

SaaS does have implications for techies. Lets say SaaS becomes the de facto standard for software use. What would that mean? Well,

  • Client organizations would need a small IT department, principally there for managing IT security, managing the Internet service, network support and desktop support. SaaS vendors might even sew up these markets too if these services look the same everywhere (except I don’t think IT security should be outsourced)
  • The remainder of IT professionals would have to find jobs in SaaS vendors or in organizations who enable SaaS vendors
  • Service Managers would be responsible for managing SLAs and contracts with the SaaS vendors, probably non-techies
  • Client organizations would lose control of their software, some of which makes their business unique in their marketplace
  • Client organizations will be constrained in their use of IT as vendors will seek economies of scale through standardization
  • Consolidation in SaaS vendor’s may result in monopolization and potentially high prices

Hmmmm…. doesn’t look good does it? The truth is that SaaS won’t be so pervasive. Market dynamics won’t allow it. I expect that SaaS will be applied to ‘infrastructure’ software and not to software that creates discreet differentiation in an organization’s marketplace (i.e. the software is the intellectual property of the organization who operates it.) But SaaS does look to grow and emerge as an alternative model to traditional IT, so I expect there maybe some shift of professionals towards them in the next two years.

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About the author /


Simon is a creative and passionate business leader dedicated to having fun in the pursuit of high performance and personal development. He is co-founder of Applied Change, a Business Change consultancy based in the UK. Simon is also an Ambassador for Gloucestershire business. Simon is an Associate Member of the Chartered Institute of Professional Development.

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