A merger of factors encourages customers to introduce a new generation of network-based business applications on demand over the Internet. The emergence of these Software-as-a-Service (SaaS) solutions is carried out by three main forces:
- Growing frustration among corporate end-users and executives with the costs and difficulties associated with traditional, local applications.
- Large-scale adoption of customer-focused on-demand services, setting a new standard for ease of use and cost-effectiveness.
- The rapid development of enabling technologies, making it more economical in developing and delivering SaaS solutions.
As a result of these trends, corporate implementation of software as a service is accelerating. This acceptance applies not only to small and medium enterprises (SMB), but also to large enterprises. This applies not only to front-office applications, such as customer relationship management (CRM), but also in back-office areas, such as accounting and financial systems. Industry-specific market-oriented SaaS solutions are also emerging.
The rapid growth of the SaaS market has attracted a wide range of competitors, both beginners and independent software vendors (ISVs), seeking to capitalize on this new opportunity. This competition puts more pressure on start-up SaaS providers to develop and deliver highly differentiated solutions at the lowest possible cost.
One of the key features of SaaS solutions is their ease of deployment and use from the point of view of the client or end user. These attributes are crucial for software providers as services who need to acquire new customers and scale up their operations in an economical way. However, this “on-board” process is fraught with complications and pitfalls that can lead to delivery problems and customer dissatisfaction.
As a result, software as a service fundamentally changes the nature of the software industry and the way software companies operate. In many cases, the transition to the SaaS model makes independent software vendors think like a web company, not a software provider. This means creating new ways to attract customers through the Internet, as well as setting new standards for the rapid deployment of their applications.
If the software provider cannot use onboard customers quickly and economically, this online business will not succeed. And if he cannot automate the on-boarding process, he cannot build a scalable and profitable business.
However, a study of Level 1 showed that only 13% of software as service providers have push-to-buy functionality on their sites. And, surprisingly, 70% of web applications and on-demand companies do not have an integrated billing solution.
SaaS Market Status
The market of software as a service is managed by a combination of ten macrocracks:
- globalization
- Commoditization / differentiation
- Dispersion of mobility and workers
- stimulating consumer interest
- Web 2.0
- Social network
- On demand
- Reliability / Security
- Operational efficiency
- Out-of-problem setting
Globalization has changed the competitive landscape in virtually every large industrial sector. Globalization has not only opened up new markets, but also opened the door to a new set of offshore competitors offering low-cost products and services that contribute to many markets and create price competition. This commoditization makes it difficult for companies to differentiate their products and services.
The variance of workforce and mobility also allow people to work anywhere, creating new problems for companies seeking to give these employees access to corporate applications and databases remotely and reliably. At the same time, many employees and corporate executives are becoming more user-friendly on demand, web-based solutions in their personal lives, and are seeking the same ease of use and low-cost services to meet their corporate and professional needs.
Business professionals have also become more comfortable using online services, such as Amazon.com and iTunes, in their personal lives. This positive experience with consumers has set a new standard for ease of use that they expect from their software applications in their professional lives.
Today, Web 2.0 and social networking tools are also applied to the corporate environment, creating new ways for scattered workers to interact internally and corporations to attract outside customers.
The growing reliance between companies for communication within and outside the country via the Internet has also made them more aware of the growing problems of providing reliable and secure online services. This pressure is increasing as they try to improve their performance in an increasingly competitive market.
Organizations are turning to on-demand solutions to overcome the flaws of legacy applications.
The growing interest in SaaS solutions is also due to the escalation of frustration among company executives and business end users with the fundamental flaws of traditional software applications in the field.
This disappointment is due to the fact that more than half of obsolete software deployment projects take up twice as much or cost twice as much as originally thought, and almost a third of software projects are canceled before they are completed, according to government research.
According to AMR Research, cost overruns continue after the deployment process is completed, since maintenance and management costs to support traditional applications can be ten times higher than the initial license fee. The AMR study also showed that most legacy applications that were completed were underutilized. This is due to the fact that many organizations overly provide their license agreements to simplify the procurement process.
In an increasingly competitive market, companies cannot afford the inefficiency of legacy applications. Instead, a growing number of organizations are looking for new ways to acquire software functionality without the additional cost of equipment and staff and the constant administrative problems of the past.
As a result of this growing interest in customers, Gartner predicts that more than 25% of all software sales will be through services by the end of 2011, but most likely this number will be much higher.
Perhaps the clearest sign of the scale of this shift toward software services was Microsoft CEO Steve Ballmer, who predicted at a public sector CIO meeting in March 2007 that 80% of their organizations would use SaaS by the end of the decade.
Challenges to meet the diverse needs of business users in the world on demand
The good news is that more and more organizations are ready to accept the Software as a service to achieve their business goals. However, based on their consumer experience, they expect that they can easily acquire on-demand solutions through a simple online transaction and immediately start using the online application to meet their business needs.
However, corporate requirements can be much more complicated than consumer expectations. Many companies will want to try the app before they buy it. They may want to purchase a license for a single user before making a commitment under a company license. They may want to vary the number of users, the number of application modules or the level of usage. They may want to use applications on demand in business situations that require different levels of security and reliability.
Strengthening the competitive landscape creates greater pressure on beginning SaaS providers to provide highly differentiated solutions at the lowest possible cost without sacrificing quality. Many of these aspiring on-demand solution providers did not fully address the complexity of providing reliable and cost-effective solutions. They often rely on viral marketing and social networking tactics to expand their established customer base, but are not prepared to let potential customers want to acquire their solutions on demand. However, bad experience can reduce the likelihood of repeat customers and clients.
Therefore, SaaS providers must develop solutions to simplify their use and optimize user experience. The quality of user experience depends on the reliability and performance of the SaaS provider service capabilities, as well as the life cycle of the procurement, preparation, metering, billing and reporting components that are an integral part of the service provision process.
Given the impact of price escalation on Software as a service market, it is important for successful SaaS providers to have cost-effective systems for acquiring and managing applications so that they can generate large sales without requiring additional employees or cumbersome processes to properly support new customers.
With the success of customer-oriented on-demand solutions, it was found that solutions for business-oriented hosted applications would be equally easy to acquire and use. Many online merchants have highly automated purchasing, billing, and reporting systems. However, for many SaaS providers, the reality can be very different.
The Level 1 study, published at the SaaS Evolution Summit in March 2007, showed that only 13% of SaaS providers have the “click on purchase” functionality on their sites. Although many of these companies offer online demonstrations of their applications, when a customer decides to subscribe to a service, the seller must involve a manager in the transaction.
Although this human interaction may seem attractive, it can lead to an awkward and costly manual process. This is especially true since corporate clients require different contracts. Some may require a price for each user, while others may look for prices based on usage. Companies that do not have integrated input capabilities and services to handle new customers or change the service levels of existing accounts will face serious operational constants as they try to scale up their operations.
Marketing hype around on-demand solutions also suggests that companies will be able to purchase online pay-for-you services. But many companies also lack reliable means of measuring and measuring the use of services for proper monitoring and billing for services. This flaw can create billing disputes and force SaaS to skip new sales opportunities.
These problems can become even more difficult when a company tries to attract channel partners to sell its services or when a company tries to integrate its solutions with third-party SaaS providers. Tracking these transactions can lead to a variety of issues related to the preparation, measurement, and billing.
Closely related to these service management issues, this is a multi-tenant architecture that makes SaaS scalable and profitable. Many aspiring software vendors are migrating from a single-instance local architecture to a software package architecture and need assistance in developing, developing and deploying a multi-tenant architecture to ensure that it can withstand growing demand.
In many areas of business applications, revised certificates are necessary to comply with government and / or industry regulations. An increasingly important certification in online transactions is the payment card data security standard (PCI DSS 1.1).
This worldwide data security standard applies to any organization that stores, transmits or processes credit card holders. Since many clients with hosted apps purchase these online services with a credit card, it is important that the SaaS provider or its hosting partner have proper PCI procedures and certificates.
In addition, many companies still rely on hosting companies that cannot constantly keep their promises of availability and performance. These providers mistakenly believe that hosting is a commodity business and can be taken for granted. They do not understand that many general purpose hosting companies lack the capabilities to provide high availability services, integrated management systems and proactive reporting mechanisms to support the five nines service standards required in the SaaS market.
As a result, SaaS providers that rely on public hosting companies are often notified by their customers of service outages. This is not a way to win and preserve the trust and confidence of customers, as well as create a business "Software as a service.
In fact, a drop in any of these areas can have a detrimental effect on the quality of customer service, damage customer satisfaction, and lead to customer failure. Just as in the wireless services business, rolling back customers can be very costly on the SaaS market. But, with lots of online chats, reports of poor customer service travel faster and farther in the market, seriously undermining the vendor's chances for success.
However, most aspiring SaaS companies face increased competitive pressure, which requires them to focus their energy on building better on-demand applications, rather than worry about the service delivery infrastructure and the operational processes that will support them. The subscription fee structure associated with web application delivery also makes it difficult for companies to invest in their own service infrastructure and support staff to solve these problems.
How do implementation companies handle SaaS On-Boarding tasks?
Many providers will have to contact a third party hosting company for infrastructure or support. The hosting or application provider company must go beyond traditional hosting and managed services to maximize ROI for independent software vendors. Most advanced application management companies will provide the On-Demand platform, which includes a comprehensive set of services that will allow web applications and companies on demand to more quickly and efficiently develop and deliver their online solutions.
Along with this comprehensive suite of services, hosting companies must offer a solution for processing payments and fees to help web applications and on-demand companies bypass the problems of billing for software delivered via the Internet. Ideal tools in this niche will include — at a minimum — account activation, pricing and execution speed, confirmation of usage information, creation and delivery of invoices, and processing payments, fees, and suspension of service. ISV must also look for a hosting solution that provides real-time account creation, user authentication and authorization, activity tracking, evaluation and evaluation, billing, and customer service that can scale to millions of users. This scalability and flexibility are what application management companies must provide for successful application delivery.
Application providers and hosting companies should also provide comprehensive analytics packages to independent software vendors and developers. This is also critical to the success of this application, as it allows web applications and companies to receive a wide range of operational indicators on demand to better manage their business and optimize their performance, such as:
- Bandwidth consumption
- Пороги производительности
- Потребляемые единицы: клики, места, загрузки
- Входные ставки
- Отток клиентов
- Темпы роста
- ROI рекламы
- Использование функций
- Ставки дневного дохода
Наконец, его независимым разработчикам следует признать, что модель абонентской платы, связанная с SaaS, может представлять собой серьезное препятствие для многих независимых поставщиков программного обеспечения, которые пытаются запустить и затем масштабировать свои операции. Это делает успешные модели ценообразования выгодными для независимых поставщиков программного обеспечения, поскольку они будут платить за услуги управления приложениями, поскольку они будут получать доход от своих решений SaaS. Это устраняет дорогостоящие инвестиции в инфраструктуру и персонал и снижает риск запуска.
Резюме и выводы
По мере того как организации становятся все более сыты по горло затратами и сложностями устаревших приложений, они становятся более восприимчивыми к альтернативам программного обеспечения по требованию. Широко распространенный характер услуг по требованию в мире потребителей также позволил профессионалам бизнеса лучше понять потенциальные преимущества альтернатив, возникающих в онлайн-приложениях в Интернете.
Однако простота использования и надежность этих ориентированных на потребителя, веб-сервисов установили высокий стандарт качества обслуживания, которое корпоративные пользователи ожидают от своих прикладных решений. Они ожидают, что так же легко попасть на борт с решениями SaaS, так как это приобретение популярных онлайн-сервисов. Независимые поставщики программного обеспечения, стремящиеся стать ведущими поставщиками по требованию, должны внедрить систему закупок и предоставления ресурсов, которая делает это возможным.
По иронии судьбы, модель подписки на услуги по принципу «плата за звонок», связанная с SaaS, затрудняет для независимых поставщиков программного обеспечения инвестиции в инфраструктуру предоставления услуг, системы подготовки, биллинга и отчетности для полного удовлетворения потребностей своих клиентов. Вместо этого, независимые разработчики должны сосредоточить свои ограниченные финансовые и кадровые ресурсы на разработке веб-приложений, которые более убедительны, чем их конкуренты.
В результате интеллектуальные ISV объединяются с поставщиками услуг и приложений, которые могут делать больше, чем просто размещать свои приложения. Они ищут поставщиков, которые могут помочь им разработать свои приложения, чтобы обеспечить их масштабируемость и безопасность. Они ищут поставщиков, которые могут контролировать и управлять приложениями 24x7. Они ищут поставщиков, которые могут помочь им предоставить и взимать плату за свои заявки. И они ищут поставщиков, которые могут помочь им построить успешный бизнес SaaS на все более сложном рынке.
