Sheila Brisland

Product Manager

sheila.brisland@snowdrop.co.uk
Software as a Service (SaaS)


Agenda
Introduction
What is Saas?
Some examples
The market
Architectures
Implications for the buyer
Implications for the service provider
Questions
Introduction
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

Snowdrop software & services


Snowdrop software & services
What is Saas?


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 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 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:
Outsourcing - utilising any external agency or
organisation to fulfil an element of business
management, for instance to man a call centre or
run a companys payroll
Hosting provision of access to software
installed remotely, probably including data
management
Some examples
Sage CRM
Ebay
Snowdrop HR
The market
The SaaS market
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
The SaaS market
Architecture
Architecture
SaaS stack
Metering &
Billing
Subscription
& Provisioning
Indexing, App servers, Mobile support
Hardware, Hosting and IT Support
Identity
Security
Session
Presentation Frameworks
SaaS Applications
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
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

Implications for the buyer
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
Collaboration
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
Implications for the service provider
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
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
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
Questions?