Before we explore the ways that SaaS can be leveraged in a business setting, I think it is helpful to discuss how the new way is drastically different from the traditional way of using software applications.

The traditional software model basically boils down to the user finding an application they need and then going to that vendor and purchasing the license to use their product on their PC. This license and accompanying software is typically delivered on a CD or DVD. Upon delivery the end user would install the application on their computer. If they had multiple computers, the end user would purchase multiple licenses and install those licenses on multiple PCs. Depending on the software, the end user might also be required to install a server in order for the application on each PC to talk to a central data store, like a client database or company financial data. This client-server model eventually led to the purpose built network rooms and data centers found in many businesses today.

This setup used to be the only way to distribute applications because the bottleneck for the longest time has been high speed access to the Internet. But with the thousands of miles of fiber optic cabling that was laid during the tech boom, Internet networks and the end user bandwidth available now is much faster and finally large enough to handle delivering applications through the Internet.

So what does this mean for your business? If you currently have in house solutions, servers and software, in a network closet or data room, it allows you the option of a different software delivery model that offers cost savings and a better user experience. You are no longer required to purchase servers, provide this equipment power and maintenance with expensive IT personnel, and purchase software upgrades. Depending on the cost structure of the particular application, most Internet delivered applications charge a modest per user fee to access their service. The only thig required of the end user is to connect
through the web and start using the product. No server configuration, no hardware purchases and the lifetime of maintenance that goes along with it, no software to patch and eventually upgrade, nothing required of the end user except to use the product.

SaaS also gives smaller businesses, who before were unable to afford expensive software and hardware, the ability to use features of these formerly enterprise level softare packages to grow their companies and compete at a higher level. The next questions is how does one make the transition to SaaS? This question will be answered in the following post – “Making the transition.”

Don’t you love it when people use acronyms and forget to let you in on the what they are really talking about. I think behind the military, the computer industry is one of the key offenders in this area. So, before we launch into what the terms in the original question mean, lets at least define what the terms stand for.

SaaS, or Software as a Service, and cloud computing, the cloud being a symbol for the Internet, are key technologies that are revolutionizing the way people interact and use their computers and the Internet. If you haven’t noticed already, many of the
applications that people use on a daily basis are actually Internet based. These photo sites, social networking, and email applications are all programs that users interact with through a very familiar delivery mechanism, the web. This transition of more and more applications to the web, where the user no longer has to download and install local software on their PCs, is the basic idea behind cloud computing and application delivery know as software as a service.

You may be asking yourself, I see this happening to the applications that I use personally, but how does this technology translate into something I can leverage within my business? This question will be the subject of a more indepth answer in the following post – “In House v. The Cloud”.