How do I implement a SaaS solution
Software as a Service (SaaS): The principle of the energy supplier
Implementing complex software in its own structures has often been associated with high costs for companies, both financially and in terms of personnel, regardless of how much the integrated applications are subsequently used.
Thanks to cloud computing, which has become more and more widespread in recent years, and the associated possibility of renting software applications using "software as a service", companies are presented with new variants that also have some advantages over the traditional license model.
Especially the fact that SaaS solutions are cheap and easy to integrate as well as make extremely complex software affordable for SMEs, which was previously reserved for large companies, makes this model attractive.
When the customer, usually a medium-sized or large company due to the high costs, acquires the software, he receives the license and the right to use the software. The provider provides the customer with an installation package. For the installation, however, your own IT infrastructure (hardware, operating system, database, etc.) is required, which, together with the development of the software solution tailored to the company, represents a complex, expensive and risky investment. Once installed, the software is configured according to business needs. Once the software has been introduced into the corporate structures, the company takes over the entire operation of the IT infrastructure and the associated IT tasks
Software as a Service: Applications for rent
The software as a service model emerged from the innovation of cloud computing, one of the most important current trends in corporate IT. The idea behind cloud computing is to provide IT resources via the Internet or intranet (“the cloud”) as needed so that they can be used by others and billed according to their actual consumption.
More and more applications, including software, no longer have to be bought, but are available as rental software.
The Software as a Service (SaaS) principle can be clearly explained by imagining an energy supply company. There the customer draws his electricity from the socket if necessary, but does not have his own small power plant in the backyard, but his energy supplier who takes on all the tasks to generate electricity and make it available to his customers.
The customer only uses the electricity and pays a usage-dependent fee for it.
In the SaaS model, a company takes on the role of supplier by developing and operating the business software, as well as providing maintenance and technical support. Both the technical components are completely taken over by the supplier, the SaaS provider, as well as other operational services such as authentication, availability, updates and adjustments. The customers of the SaaS provider can use the software by connecting to the service provider via the Internet, or more precisely via the "cloud", and purchasing the components of the software that they have purchased.
For the billing of the SaaS solution, many companies use a very rudimentary approach, in that the price is the number of users times rental fees, i.e. it is just as usage-dependent as with an energy supplier.
The importance of software as a service in the software market is growing all the time
The use of software as a service has been increasing enormously for several years and there is currently no end in sight. In 2013, strong growth was particularly evident in the high-turnover market of SMEs and micro-enterprises. During this period, usage increased by almost 30% compared to 2012.
In an assumption on the market volume of cloud computing (B2B) in Germany, Statista predicted not only an enormous overall increase in cloud service (SaaS, PaaS, IaaS) but also, in particular, a five-fold increase in the market volume of SaaS solutions in Germany to almost 8 billion euros in 2017.
Furthermore, it can currently be observed that the SaaS market is growing six times faster than the overall market for software. In 2025, companies are expected to spend € 11 billion on SaaS. This would be 90% of all expenses for standard software in Germany.
Software as a service has potential for savings
The increasing demand for software as a service solutions is based on the assumption that applications can be operated more cheaply as rental software than purchased. But such a blanket statement does not always have to be correct. Proponents of licensed software use the argument, for example, that SaaS also requires significant initial investments for integration into the existing infrastructure, which is why it can incur not inconsiderable costs.
However, it must be noted that with a software as a service model, the effort for data center operation, maintenance, hardware renewal and, above all, software updates with the resulting adjustments is no longer necessary for the company using it. Depending on the scope and complexity of the software, the costs incurred can go well beyond the fees for license and manufacturer maintenance. In addition, the opportunity costs of all these expenses must also be taken into account, especially of course with the investment costs. Accordingly, if SaaS is used and implemented in a targeted manner, it also offers significant savings potential in addition to other advantages.
The SaaS market is growing and, according to current forecasts, the software as a service model appears to largely replace the traditional license model over the next few years when it comes to the implementation of complex software in company structures.
One of the reasons is that software as a service holds potential for savings, especially if you consider the "non-obvious" costs that arise when implementing software, especially if it is complex and needs to be embedded in larger, existing company structures.
Do you already have experience with software as a service? Find out more here. You are also welcome to write your experiences and opinions in the comments.
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