The major disadvantage of the ASP model was providers typically hosted standard vendor products. Oracle (including the Oracle, PeopleSoft and JD Edwards families of software) and SAP have engineered their solutions for single-customer execution environments; for single-tenancy. These environments include tiered, multi-server architectures with specialized servers for applications, databases, and other activities.
With single-tenancy execution, each customer has his or her own separate execution environment. This means if you need one application server to host Company X, you need a second for Company Y and a third for Company Z. The same applies to database and other servers, because the software was never designed for multiple companies to run applications on a single instance. This architecture impeded ASP’s ability to scale and the concept dwindled.
SaaS software is specifically engineered for multi-tenancy. Customer implementations can be insulated from one another and still be stacked on shared computing resources. This is a major cost savings that enables some SaaS vendors to dramatically whittle down delivery costs.
SaaS vendors enjoy other advantages as well. They support only one version of their software and deliver their service on a single platform. Many are making wide use of open source in their products, eliminating a large percentage of licensing fees. They are designing delivery platforms capable of piggybacking multiple products on a single delivery infrastructure. Finally, they are making broad use of service-oriented architecture (SOA), which simplifies software delivery and scaling while providing a very flexible platform for ongoing product development.
Overall, the SaaS model brings with it advantages to consumers that are difficult to ignore. The prospect of predictable levels of service at a predictable cost with minimal risk is an attractive one, especially to war-torn IT organizations tattered from the struggle to deploy and maintain enterprise software packages. Although the industry is still nascent, with many SaaS applications focused at the small to mid-sized (SMB) market, they continue to mature in terms of scalability and functionality.
SaaS also gives SMB subscribers an expertise advantage. Smaller companies typically have a relatively few number of IT personnel who wear many hats. With the complexity of today’s IT, it’s not possible for a small team to have both breadth and depth.
SaaS provides a way to share expertise among multiple customers while still providing high quality business services. Combined with predictable cost, this combination will be difficult to ignore. The bottom line is SaaS is here to stay, and the industry’s first glimpse of “IT as a utility” is very tantalizing indeed.