The pros and cons of SaaS

David Chappell, cloud computing expert discusses why companies should adopt SaaS apps

David Chappell, principal of David Chappell & Associates and an expert in cloud computing, was at Microsoft in Dubai this week to discuss the pros and cons of SaaS implementation.

David Chappell, principal of David Chappell & Associates and an expert in cloud computing, was at Microsoft in Dubai this week to discuss the pros and cons of SaaS implementation.

Published Wednesday, 30 November 2011
By Georgina Enzer

Cloud-based Software as a Service (SaaS) is being rapidly adopted by companies across the globe and David Chappell, the principal of David Chappell and Associates, an expert in cloud computing, was at Microsoft in Dubai this week to discuss the pros and cons of SaaS implementation.

"There are lots and lots of SaaS-based offerings out there. Gartner and Forrester tell us that the growth of SaaS applications is today, and will be going forward, much larger than the growth of current on premises applications," said Chappell.

There are a range of benefits for companies that switch to SaaS, the first benefit being that the deployment of SaaS is much faster and less complicated than the deployment of traditional software.

With a conventional app, the software has to be installed on the company end-points, and then configured to the network, which takes time and money. With an SaaS app, corporate users can click on a URL in their browser and access the latest updated software.

Another benefit of SaaS is the pricing models.

"Most SaaS applications do not charge customers in the traditional upfront licence and maintenance model; rather they most often charge by subscription i.e. a certain amount per user, per month. Some SaaS apps are also transaction-based. If the company is, for example, sending messages, they might be charged a certain amount for sending messages," said Chappell.

Pricing is almost always usage based and customers like this, they pay for what they actually use instead of paying large licensing fees for things they don't completely use, he said.

Customers also have much less financial risk when using SaaS; instead of paying a big substantial fee upfront and then later on finding they don't need all that software, companies can start small and grow, as they develop more business value.

"This strategy is common and it means there is much less risk upfront and virtually every SaaS offering has a ‘try before you buy' option, which allows customers to experiment with the app and often use the full version for a period of time, to make sure this is what is needed," said Chappell.

There is also a reduced need for on-premises resources such as servers and IT staff, because it is all in the cloud, in someone else's data centre.

"At the moment, email is going quite fast in the cloud, so people whose whole skill set and career is built around being able to configure, install and manage exchange servers, do not have a great career path in front of them over the next five years. What must they do? Retrain, re-skill, do something else," Chappell said.

SaaS is also easier to upgrade as companies only have one copy up in the cloud to update.

"There are some fairly clear elements in SaaS that customers like, if that was all, if SaaS was just benefits, the world would change to SaaS in a heartbeat, but like almost everything SaaS also has risks," said Chappell.

A  major concern for both companies and governments is about their data being held in data centres in other countries and that data being subject to the country's regulations; for example the US Patriot Act.

"The Patriot Act applies to data stored in computers owned by US companies; the big cloud companies are all US-based. They can come, look at your data and not tell you. My understanding is that the Patriot Act applies to any company that has a US presence. If your company has a sales person in the US, your data is accessible to the government. In many other countries in the globe, governments have the very same laws, but the US is in the spotlight because they have Free Speech laws. I do not believe that cloud computing exposes and more, or much more today than the Patriot Act in terms of accessibility of data to governments," said Chappell.

Another one of the major risks of SaaS, according to Chappell is security, and being able to trust the cloud service provider. Companies and governments who are thinking of implementing SaaS need to understand that they do not need to put their most sensitive data in the cloud and that very secure data, such as financial data, should never be in the cloud.

"If you were working with intelligence and defence data, I believe it will be forever before these agencies start storing that data in the public cloud. It is just not an option for this. However, governments frequently have a whole range of data with varied privacy concerns. Intelligence data will never go on public cloud, but on the other end is data that is mandated to be made public. The US for example creates census data, geographical data etc. That stuff is very good for cloud computing. My experience is that people jump immediately to the notion of storing their most secure data in the cloud. But that is not all they have," said Chappell.

Companies and governments need to start trusting in cloud service providers because SaaS technologies provide benefits such as being cheaper and easier than traditional software options.

Other concerns about SaaS include that it is very difficult to customise code for each individual customer as the code for applications is mostly all the same.

Integration can also be harder than traditional software options, and performance can also be an issue, depending on where a company is and how good its network connections are.