Software as a Service

1. Software as a Service Andrew Cook Brenda Grady Nicholas MacDonald Allison Pickup 09/03/09 INFO 420 - SAAS 1

2. Overview What is Software as a Service? Software as a Service Overview Pros & Cons Applications and Impacts The Future of Software as a Service Case Study: Freshbooks 09/03/09 INFO 420 - SAAS 2

3. What is Software as a Service? SaaS: is a model of software deployment where an application is licensed for use as a service provided to customers on demand. Source: Wikipedia In simpler terms: http://www.youtube.com/watch?v=kGUPSvswmY0 09/03/09 INFO 420 - SAAS 3

4. Software as a Service Overview Increasingly popular method of software deployment. Companies run software on a vendor�s or service provider�s servers. Payment based on subscription or time used Instead of an individual license Users interact with the software via a portal Almost any software can be run using this method CRM is by far the most popular 09/03/09 INFO 420 - SAAS 4

5. NOT like application service providers of the 1990s Multitenant Architecture vs. Dedicated Servers Users create own interface layout and custom modules instead of providers Lowers Overhead for providers Overall SaaS is a more cost-effective model 09/03/09 INFO 420 - SAAS 5

6. Pros Global Availability Access the software from any machine Cost Saving No hardware costs Less/No IT management or Support No License Tracking Provider is responsible for updating software IT Staff may still be needed for customization Pay as you go Scalability Servers can be added to support more traffic 09/03/09 INFO 420 - SAAS 6

7. Cons Data is transferred at Internet speeds instead of Ethernet speeds. No guarantee that provider will not go bankrupt. Integration - No way to know if current systems will integrate with SaaS Trading high initial costs for long-term payments Over time SaaS will cost more than traditional software Divided priorities of provider You are not the only customer 09/03/09 INFO 420 - SAAS 7

8. Applications and Impacts Application: SaaS is a non-risk, cost-efficient solution for businesses lacking resources Impact: Access to software Creates competition and can bolster the economy Application: SaaS is versatile; software is easily used from internet browsers �Impact: Time savings Working at home is also more viable, which increases flexibility 09/03/09 INFO 420 - SAAS 8

9. Application: SaaS allows monthly payments Impact: Implement software without fear Makes software a commodity Easily calculated return on investments Application: Providers of SaaS must provide hardware to run software �Impact: Organizations lacking resources to manage hardware can use a SaaS solution Allows more companies to use software, and allows for re-allocation of resources 09/03/09 INFO 420 - SAAS 9

10. Future of SaaS 25% Growth annually Asia-Pacific Region Customer Relationship Management Human Resources Other areas? 09/03/09 INFO 420 - SAAS 10 It�s predicted by Gartner that Software as a Service will grow by 25% annually until 2011 and that revenue from software as a service will reach 14.8 billion by 2012, in 2007 it was 5.1 billion. The largest growth drivers are expected to be limited capital investment, reduction in software management, ease of uses and rapid deployment. Most of this growth is expected to be seen in the Asia-Pacific region, currently the largest market shares held by Software as a Service are in Japan and Australia. Much of the immediate future growth will be in the customer relationship management and human resource fields where SAAS is currently most popular. It is also gaining popularity in risk management, office admin, compliance, procurement optimization, sales and service automation. It�s predicted by Gartner that Software as a Service will grow by 25% annually until 2011 and that revenue from software as a service will reach 14.8 billion by 2012, in 2007 it was 5.1 billion. The largest growth drivers are expected to be limited capital investment, reduction in software management, ease of uses and rapid deployment. Most of this growth is expected to be seen in the Asia-Pacific region, currently the largest market shares held by Software as a Service are in Japan and Australia. Much of the immediate future growth will be in the customer relationship management and human resource fields where SAAS is currently most popular. It is also gaining popularity in risk management, office admin, compliance, procurement optimization, sales and service automation.

11. Future of SaaS Fragmented Software Reduction of custom code ERP Applications Security Improvements 09/03/09 INFO 420 - SAAS 11 In the further future, some believe Software as a service is going to lead to software being fragmented into its component parts and therefore allowing users to mashup components however they desire. Also if custom code is reduced then SaaS could take over more critical areas such as completely running ERP applications. But for Software as a service to really take off, security improvements are going to need to be concentrated on and they could definitely be the greatest hindrance to Software as a service. In the further future, some believe Software as a service is going to lead to software being fragmented into its component parts and therefore allowing users to mashup components however they desire. Also if custom code is reduced then SaaS could take over more critical areas such as completely running ERP applications. But for Software as a service to really take off, security improvements are going to need to be concentrated on and they could definitely be the greatest hindrance to Software as a service.

12. Case: Freshbooks & SaaS Toronto based software company. Before using SaaS, their software was accessed using CD�s, or internet downloads. With SaaS customers can access Freshbooks software applications via a web browser. Began with 185,000 users in the small service industry. Now over 700,000 users. 09/03/09 INFO 420 - SAAS 12 Fresh books � a small (with only 9 employees) Toronto based Software Company that offers an online accounting program. Before implementing SaaS, software had to be accessed with a cd, preinstalled on the computer, or downloaded from the web. Saw customer service as a critical role /customers needs come first in the eyes of Freshbooks. With SaaS customers can access Freshbooks software applications via a web browser. Where they just pay for it using an annual, monthly, or per usage fee. When beginning to use SaaS Freshbooks had about 185,000 (mainly in the small service industry) Now, as of Jan 2009 Freshbooks has over 700,000 users Fresh books � a small (with only 9 employees) Toronto based Software Company that offers an online accounting program. Before implementing SaaS, software had to be accessed with a cd, preinstalled on the computer, or downloaded from the web. Saw customer service as a critical role /customers needs come first in the eyes of Freshbooks. With SaaS customers can access Freshbooks software applications via a web browser. Where they just pay for it using an annual, monthly, or per usage fee. When beginning to use SaaS Freshbooks had about 185,000 (mainly in the small service industry) Now, as of Jan 2009 Freshbooks has over 700,000 users

13. Benefits to Freshbooks: SaaS provided more consistent cash flows. Lower support costs. Drawbacks to Freshbooks: No big influxes of cash from sales Main Results of implmenting SaaS: Improve customer relationships and stay in tune with customer base. Allow users to view aggregate data with quarterly report cards, and industry benchmarks. 09/03/09 INFO 420 - SAAS 13 The main benefits they received from SaaS: Provides consistency of cash flow/more predictable revenue stream because software is accessed on a subscription basis Revenues consistently growing (because they have existing subscribers and are continually adding new ones) / makes companies such as Freshbooks attractive to investors Able to keep customers up to date with the most recent versions of their software because its offered over the web � leads to lower support costs But main drawback: No big influxes of cash from sales � unable to immediately reinvest learned they need to be patient b/c there�s no immediate upfront profit, so focus more on cash management and retention Basically, their main strategy for implementing SaaS was to improve customer relationships and to remain in tune with their customer base, to see what they need or want. Allows the company to view aggregate data, and offers quarterly report cards for their users. Able to view their own results, and results of users in similar industries to compare. The main benefits they received from SaaS: Provides consistency of cash flow/more predictable revenue stream because software is accessed on a subscription basis Revenues consistently growing (because they have existing subscribers and are continually adding new ones) / makes companies such as Freshbooks attractive to investors Able to keep customers up to date with the most recent versions of their software because its offered over the web � leads to lower support costs But main drawback: No big influxes of cash from sales � unable to immediately reinvest learned they need to be patient b/c there�s no immediate upfront profit, so focus more on cash management and retention Basically, their main strategy for implementing SaaS was to improve customer relationships and to remain in tune with their customer base, to see what they need or want. Allows the company to view aggregate data, and offers quarterly report cards for their users. Able to view their own results, and results of users in similar industries to compare.

14. Questions? 09/03/09 INFO 420 - SAAS 14