1. SaaS: A Revolution in Software Design Gerett Commeford M.Sc. Candidate, University of Guelph Tuesday February 13, 2007 Service Oriented Computing

2. Tuesday February 13, 2007SaaS: A Revolution in Software Design2 / 14Purpose  Explore the details of Software as a Service (SaaS)  Perform a cost analysis Traditional vs. SaaS enterprise softwareTraditional vs. SaaS enterprise software  Determine when to implement SaaS  Look at the future of SaaS

3. Tuesday February 13, 2007SaaS: A Revolution in Software Design3 / 14Introduction “Software evolution has been traditionally associated with the idea of changing the code of a system, or system’s component. It is universally accepted that software must be continually changed to remain satisfactory in use and evolution is often seen as the long term result of software maintenance.” [1] Traditional softwareTraditional software –OK for home users –NOT OK for businesses

4. Tuesday February 13, 2007SaaS: A Revolution in Software Design4 / 14 Costs of Doing Business Enterprise Software PackageEnterprise Software Package –License Fees –Hardware Deployment –Backup Software –Network Bandwidth –IT Staff –Training Staff As much as $9 on hidden cost for every dollar spent on license fees [2]As much as $9 on hidden cost for every dollar spent on license fees [2] Source: Microsoft Clip Art

5. Tuesday February 13, 2007SaaS: A Revolution in Software Design5 / 14SaaS “The software industry is weakly founded, and one aspect of this weakness is the absence of a software component sub-industry” [3] SaaS DefinedSaaS Defined “A model of software delivery where the software company provides maintenance, daily technical operation, and support for the software provided to their client” [4] Distinction between possession and ownership of software from its useDistinction between possession and ownership of software from its use

6. Tuesday February 13, 2007SaaS: A Revolution in Software Design6 / 14 History and Current Trend Application Service Provider (ASP) vs. On- Demand ServicesApplication Service Provider (ASP) vs. On- Demand Services –Single-tenant vs. multi-tenant –Hosting the application –Performance Market for SaaS reached $4.2Market for SaaS reached $4.2 billion in 2004, and is expected to expand to $10.7 billion by 2009 Source: Microsoft Clip Art

7. Tuesday February 13, 2007SaaS: A Revolution in Software Design7 / 14 Cost Analysis Salesforce.com Salesforce.com –Market leader for on-demand customer relationship management (CRM) Total Cost of OwnershipTypical Licensing Software Professional Edition subscription with Salesforce.com Number of Users50 Application License & Subscription$100,000.00$39,000.00 Support / Upgrade Costs$18,000$0.00 Implementation & Customization (Price will vary) $100,000.00$9,750.00 IT Infrastructure / Hosting Costs$100,000.00$0.00 IT Personnel Support$50,000.00$0.00 Training Costs (Administrator & End User)$15,000.00$3,900.00 Totals ($)$383,000.00$52,650.00 Costs (%)100%14% Source: http://www.salesforce.com/products/tco.jsp#tablehttp://www.salesforce.com/products/tco.jsp#table

8. Tuesday February 13, 2007SaaS: A Revolution in Software Design8 / 14 When to use SaaS “For core activities, the goal is to differentiate as much as possible on any variable that impacts customers’ purchase decisions and to assign one’s best resources to that challenge. By contrast, every other activity in the corporation is not core, it is context.” [5] Source: Geoffrey A. Moore, Living on the Fault Line, Revised Edition, HarperCollins, 2002, page 26

9. Tuesday February 13, 2007SaaS: A Revolution in Software Design9 / 14 Future of SaaS Fastest growing segment of the enterprise application marketFastest growing segment of the enterprise application market –Growing at a rate of 25% per year, compared to 5% per year for traditional software Improvement is neededImprovement is needed –Customization –Security & Privacy –Availability & Reliability Source: Microsoft Clip Art

10. Tuesday February 13, 2007SaaS: A Revolution in Software Design10 / 14Customization SaaS Lacks the ability to satisfy a business’ unique needsSaaS Lacks the ability to satisfy a business’ unique needs –Technical complexity and Cost Will large corporations pay to customize?Will large corporations pay to customize? –Even if operational and maintenance costs are absorbed by the application vendor? –Will it be worth wile for the vendor? Highly customized applications may never see a migration to service architectureHighly customized applications may never see a migration to service architecture –SaaS could remain the way it is.

11. Tuesday February 13, 2007SaaS: A Revolution in Software Design11 / 14 Security & Privacy Data and information storageData and information storage –No longer responsibility of IT Manager –Transportation security Intranet vs. InternetIntranet vs. Internet Vendors must be able to be trustedVendors must be able to be trusted –Liability issues –Privacy issues

12. Tuesday February 13, 2007SaaS: A Revolution in Software Design12 / 14 Availability & Reliability Reliance on connectivityReliance on connectivity –Ability to use software offline is a necessity in the business world –Traveling Salesman –Downtime? Network BandwidthNetwork Bandwidth –More, more, more…

13. Tuesday February 13, 2007SaaS: A Revolution in Software Design13 / 14Conclusions Without a doubt a revolution in software designWithout a doubt a revolution in software design Subscription instead of ownershipSubscription instead of ownership –Creates a business advantage and speaks to a whole new mind set in the area of software acquisition What does the future hold?What does the future hold? –Where will industry expand? (MS, etc.) –How long until SaaS is labeled Traditional?

14. Tuesday February 13, 2007SaaS: A Revolution in Software Design14 / 14 [1] Canfora, G. 2004. Software Evolution in the Era of Software Services. In Proceedings of the Principles of Software Evolution, 7th international Workshop on (Iwpse'04) - Volume 00 (September 06 - 07, 2004). IWPSE. IEEE Computer Society, Washington, DC, 9-18. [2] Yankee Group [3] MCILROY, M. D., 1968. Mass produced software components. In Software Engineering; NATO Scientific Affairs Division, Brussels, Belgium, pp. 138-150. [4] Wikipedia.com [5] Geoffrey A. Moore, Living on the Fault Line, Revised Edition, HarperCollins, 2002, page 26