March 4, 2009

Look who’s SaaS-y

Mar. 4, 2009 at 01:32 PM | By Dan Obregon | Comment Count

Since the launch of our Software-as-a-Service (SaaS) CRM for Higher Educaiton platform in late 2007, our customers have seen first-hand what some of the advantages of this new delivery model in terms of deploying their service, receiving frequent product updates and enhancements, and scaling/configuring the solution to meet the needs of their individual organization. In fact, SaaS and/or “cloud computing” is beginning to get a lot of attention across higher education. University Business this month published 10 Questsions to Ask About the Cloud.

However, we still find that there’s some confusion in the market with regards to SaaS products and traditional Hosted ASPs or application service providers. At first glance, the differences may not seem clear, but the reality is that these two delivery models are quite different and each has its pros and cons.

In a hosted environment, a unique instance or version of a software is installed on a server housed by a third-party’s data center where they “host” it for your institution as opposed to having your institution’s IT department manage the software on its own servers. Where people get confused is when the ASP vendor refers to this type of hosted solution as being “on-demand” or even as being “SaaS” when it really is not.

So how can you tell the difference?

Because the hosted ASP has individual installs it needs more dedicated hardware/software thus the overall hosting cost is higher and that cost is generally passed onto customers. In the Saas Model we are all sharing hardware and software resources thus a lower cost is passed onto the customer or your vendor can dedicate more resources to development to get you the features you need faster.

For example in Hosted ASP model you may have 2 to 1 developer to customer account manager ratio where in a SaaS model is more likely to be 4 to 1. This is so because there simply less labor by the vendor and the customer in managing solution updates because in the SaaS model there is only one version to update. In my days in higher education I remember scrambling to try to add a patch to financial aid compliance only to realize our institution was a version behind and had to move the entire school on to that version in order to get the financial aid patch needed. In the SaaS model those versioning barriers are removed.

This shared expense is also passed on in the annual maintenance of the solution. In addition in a SaaS model there is a unified coding standard with no customization thus it is less likely for client specific/customized code security breaches.

Most software solutions, regardless of how they’re hosted, will require some level of support and maintenance. If you’re evaluating hosted ASPs vs. SaaS solutions it’s probably because you’ve decided that you’d rather not dedicate your institution’s resources to provide that constant attention.

Single Tenant or Multi-Tenant

A typical ASP provider will manage several different (sometimes in the hundreds or thousands) unique instances of a software across several servers. So this means whenever an upgrade, bug fix or feature enhancement is made the provider must apply that upgrade to each instance of that software on a one-to-one basis.

A true SaaS provider is multi-tenant, which means that ever customer works off the same version of the software and everybody gets the same upgrades and enhancements at the same time. One resource we like to point to is this short movie produced by InfoWorld that explains this multi-tenant architecture in more detail.

What to ask your vendor:

1) How quickly can you set up a trial account?

Hosted ASP Response: If available, a proof of concept or demo version of the software could often take weeks to get up and running for your institution.
SaaS Response: Within a matter of minutes, a trial account can be turned on for you to review. However, we at Intelliworks will typically ask you a few questions before letting you loose on a trial just to provide you with some context and make sure you know what you’re looking at.

2) How can I customize the offering?

Hosted ASP Response: Customization requests are submitted to the solution provider and typically will require a services engagement in order to make those requested changes.
SaaS Response: Configurations to the solution can be done on an ad hoc basis directly from your tenant with little or no involvement from the provider.

3) How quickly will my service be upgraded?

Hosted ASP Response: Depending on the number of upgrades and enhancements required, and the number of solutions being hosted by the provider, this could take several weeks or months.
SaaS Response: Updates to the system are frequent and received by every customer simultaneously.

4) How secure is your application?

Hosted ASP Response: Security patches must be applied on a case by case basis.
SaaS Response: In the SaaS model, any security patches/solution updates go to all customers at the same time. From a product standpoint, this makes it much easier to enforce a security best practices for clients rapidly. For example, imagine that FERPA regulations suddenly change how institutions should store applicant/student data, SaaS solutions could enforce those changes rapidly and deploy those changes to all customers at once.

Security is an ongoing, evolving process that requires considerable vigilance. Systems that scale well are easier and less expensive to secure. The SaaS model facilitates security in numerous ways; for example, by providing a shared environment SaaS systems simplify auditing. Moreover, the SaaS model maximizes the benefits of any security investment by directly and immediately safeguarding all clients.

Key SaaS Drivers?

Now that you’re familiar with some of the key differences between hosted ASPs and SaaS, and some of the key questions to ask, you may be curious to see some of the reasons why other organizations choose SaaS delivery for their software solutions.