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Digital technology / specialisationSoftware
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Geographic Scope - CountryMalta
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Article by Johann Mifsud published in the Sunday Times of Malta on 9th October 2022
Software as a Service (SaaS) are software applications that are accessed remotely via the cloud and are not purchased, and hence do not become the property of the customer. Most people already use applications such as Google’s G suite, Zoom video conferencing, Dropbox and Office 365, among others. In addition to these ‘generic’ applications, there are many more complex and specialised applications in use by organisations of all sizes and sectors, from e-Commerce applications for a home-based online business to large enterprise systems for multinationals and anything in between. In some of these applications, the end user pays for the service indirectly via advertisement, while in others, payment is via a periodical subscription.
SaaS commonly refers to software applications licensed and delivered via a periodical subscription-type arrangement for most commercial purposes and consumed on demand. This is often based on a per-user, per month, type payment model if the application is user based. Others are based on consumption metrics like volume of data or number of transactions per period of time. Moreover, the service includes the infrastructure and platform also as service. Optionally one may also add additional services such as support, data security and other related services.
In these applications, the heavy lifting is done at the server side, in the cloud, while the user side is accessed via a lightweight application, typically a web browser. Thus the application can be accessed from any mobile device with suitable browser capability, also conferring the advantage of independence from device type.
To understand the pros and cons of this type of application, let us now have a look at some of the advantages.
Indeed, one main advantage is the fact that there is no high initial capital cost associated with the purchase of expensive hardware, including servers, racking, as well as temperature control facilities. As well as the capital cost of software such as operating systems and associated setup costs of a data centre. In addition, costs related to hardware maintenance and costly periodical upgrades are also avoided.
Another critical advantage is scalability, the capability of adding users, resources and additional functionality as needs arise, providing flexibility in terms of ease of increasing capacity and costs in lockstep with the growth of an organisation. This gives access to fully featured applications right at the start, allowing the possibility to start small and grow while using mature and reliable applications that would otherwise be prohibitively expensive to access to individuals or small organisations.
The costs relative to hiring and maintaining an in-house IT team, can be substantial, especially for a small business. Modern software systems are complex and varied in nature which implies that in order to have an in-house team that is up-to-date with skills required adds cost. Despite pouring substantial funds into the IT department, one might still not be able to reach a level comparable to that offered by the provider, which can afford to keep their personnel trained at an expert level as they distribute such costs over many customers. In this sense, SaaS can be very cost advantageous.
Finally, from a reliability point of view, such applications are backed up by significant infrastructure and large data centres. These provide very high availability and high resilience with 24/7 operation year-round, which translates to low downtime and operational costs.
Naturally, such systems also have disadvantages and certainly of primary importance are concerns over control of sensitive data, in the hands of third parties. In addition to these, there are also concerns related to the security of transmitting data over the internet. Furthermore, there are issues related to the difficulty of how data can be downloaded or transferred to other systems if required. A key concern is what would happen in case of a dispute between the platform vendor and the owner of the data. How would the data be made accessible? As clearly, it is now stored at the vendor’s servers. These concerns have been addressed by vendors over the past years by incorporating several measures in their terms to provide peace of mind for their customers.
SaaS systems also typically involve strict control of the software versions in active operation, which in turn severely limit possibilities for customisation making them unattractive to some enterprises that see customisation as an absolute necessity. The same argument also applies in cases that require access to, or integration with the customer’s existing data infrastructure, as this may be difficult. Moreover, by its remote nature, SaaS involves a time delay or latency. In situations that demand response times in a split second, such as with interfaced machinery, such a delay simply implies that these applications cannot be not up to the task.
In conclusion, the future of SaaS applications, based on adoption trajectories and trends, seems to indicate a path of exponential growth. SaaS combined with mobile devices, provides the ability to work from anywhere. Their scalability provides for agile adaptation to market conditions, which makes this model very attractive. Flexible resources, economies of scale, and high quality of service permit organisations to keep costs in check and in synch with growth while still using cutting-edge applications.
This article was prepared by collating various publicly available online sources.