According to Software as a Service providers -- who want you to run your business online -- SAAS has come of age. We put it under the microscope.Does your business really need the cost – or, perhaps more importantly, the hassle – of running its own communications and office software? Google certainly doesn’t think so. The search giant recently invited businesses to let it run their email, calendaring and productivity software for a modest US$50 per head, per year. Google joins Microsoft and a host of other companies in offering Software as a Service (SAAS), but are online applications now powerful, cost-effective and reliable enough for businesses? In this feature, we’ll examine whether it’s time to place your trust in net apps, or stick to the desktop approach.
Although the concept of delivering applications to a client computer or device has evolved over the years, the basic concept remains the same – applications are hosted and managed centrally and served to the client over a network connection on demand. At the height of the dotcom era, there was a concerted effort to establish SAAS as a viable option for businesses. Microsoft was at the forefront of this big push, but the company was smart enough to keep it at arm’s length, providing ISPs and services companies with the tools needed to offer popular Microsoft products such as Office, Exchange, SQL and even Windows in a hosted environment. Providers used client-side applications such as Microsoft Terminal Services and Citrix Metaframe to access the servers hosting the rented applications.
Like many dotcom initiatives, SAAS was a huge flop at the time, even though the concept was sound and popular with users. The mass market just wasn’t ready for this new way of receiving the apps, largely because broadband was in its infancy and there wasn’t the bandwidth to make SAAS accessible to all. It was a concept ahead of its time.
Fast-forward seven years and SAAS is back in vogue. “There’s now a widespread consensus among the movers and shakers in the industry that SAAS is an important and meaningful issue that can no longer be regarded as the lunatic fringe of software provision,” says Ben Pring, research vice president for Gartner.
Google vs Microsoft
So what’s changed this time? Microsoft has returned to the SAAS market, keen to defend its dominant position in the lucrative office software market, but now it’s selling heavily promoted Live products – email, instant messaging, project management and web tools – all of which are web based rather than needing a dedicated client application. However, Microsoft is already facing stiff competition from Google on both price and services. Having successfully taken on Microsoft’s Hotmail email service with Gmail, the search engine king has ventured further into hosted applications and services.
Google has recently upped the ante with the launch of Google Apps Premier Edition, a revamped version of its hosted applications and services designed specifically for the business market. The bundle brings together Gmail, Google Calendar, Google Talk (its instant messaging and VoIP application) and Google Docs & Spreadsheets, plus a customisable domain homepage service. “For Microsoft, Google represents a serious competitor and will provide the motivation to sort out its own SAAS offering, which is very patchy” says Bob Tarzey, service director at research firm Quocirca.
But this isn’t just a two-horse race. Companies such as ADS Portal offer conventional applications such as Microsoft Word and Excel via a hosted model. And there are plenty of alternatives to both Google’s offering and Office Live from lesser-known web-based software providers. Zoho offers a web-based word processor, spreadsheet, presentation tool, notepad, IM client and business planner. It even provides specialist business productivity tools such as a CRM system and a project-management tool.
There are also the specialist business software providers that use SAAS as
the delivery model for CRM, logistics management and accounting packages. NetSuite and Salesforce.com both offer the full suite of back-office and business-critical applications that a small, mid-sized or large company would run on its on-site client PCs and servers.
There are several factors to evaluate before pushing ahead with a full-scale deployment. These include:
Recurring costs: The cost of hosted apps varies wildly. The Google suites start with a basic free bundle and scale up to the Premier Edition, which carries a US$50 a year charge for each user.
Microsoft’s Office Live also offers a basic free service, but instead of charging per user for its premium services, it charges per business. Its US$20 per month intermediate service offers website hosting, 1GB of web storage space and up to 50 company-branded email accounts. Step up to its US$40 per month premium service and you get all the above, plus an extra gigabyte of web storage, and site-collaboration and project-management tools.
Independent providers sell individual components for different prices.
Fitness for purpose
Many of the SAAS solutions on the market today, including both Google Apps and Office Live, are still in beta and have been for quite some time. You have to ask yourself whether you’re willing to deploy beta software, albeit hosted, in a live business environment. Some industry experts claim beta software is too risky for mission-critical applications. “Are Google’s apps ready for the enterprise? Not yet. It’s surprising how little the applications have moved on since Google first launched them,” says David Bradshaw, principal analyst at Ovum. Business users may find that key features they’ve come to rely on are omitted from Google Docs & Spreadsheets – the option to plot graphs from data, for instance – so a full evaluation is critical before committing to even a trial deployment.
Google has attempted to ease the fears of IT managers with its Premier Edition of Google Apps, which offers 24hr telephone technical support and, crucially, a service level guarantee of 99.9% uptime. Microsoft offers telephone technical support for both its paid-for packages.
The bandwidth burden
If you migrate your email to Google’s webmail service, every single user in your company will likely have a browser open all day, looking at and constantly refreshing Gmail. Using a client email application such as Outlook in conjunction with Exchange still involves some network traffic, but many of the mail-reading and searching tasks take place client-side, with network traffic reserved for send-and-receive checking and the one-time downloading of new mail.
With a hosted web-based email service, even if you’re revisiting old email, there will probably be no caching of that page, creating network traffic every time you load it. Insufficient network and internet bandwidth will hamper the user experience, which means it’s essential to consider how much capacity you have before deploying a hosted app.
“You don’t want network latency to be an issue for the user when you have everyone hitting the web to send a mail or write a document, so it’s harder, in some ways, to architect your network than if you were operating a normal client-server network,” says Peter O’Kelly, an analyst at Burton Group. “Even though bandwidth is increasing, the pipes are getting filled with things like video, so the user experience will likely be less than perfect for the next three to five years while broadband grows to cope with everything we’re now throwing at it.”
Integration with your existing IT
Both Microsoft and Google services will allow you to integrate your existing domain name with user accounts and email, so corporate email addresses can be email@example.com rather than firstname.lastname@example.org. The same applies for websites and intranet homepages hosted by the companies. Integrating the actual web-based applications with your existing software is more troublesome. Don’t expect to upload your legacy Exchange email data into your Gmail-based webmail service, for example.
The biggest problem with all the hosted solutions is that they need an active internet connection to access them. If you’re a field worker or regularly travel, Google’s web-based word processor will be unavailable until all trains and planes offer in-journey broadband. “Google desperately needs an offline client. No net connection means its service is useless, unless you have an offline mirror of some kind,” says David Bradshaw.
The Office Live products are heavily tied into Microsoft’s Internet Explorer browser, meaning Windows-based PC use is a must. Hosted Exchange is less fussy. Google’s apps are happy with pretty much any browser, meaning you’re not restricted to one type of PC. Macs and Linux-based computers are usually happy with Google’s apps, although you may need to use Firefox rather than Apple’s Safari browser to ensure wysiwyg editing tools function properly, particularly within the word processor and spreadsheet.
Benefits of third-party hosting
The host is usually responsible for deploying patches and upgrades, as well as maintaining a service level agreement to ensure a minimum level of service. It’s an easy way to ensure you always have the latest version of a key application available on tap. And, as you’re renting individual user licences, you can be flexible about the number of accounts you have, ensuring you pay only for what you use. If you’re a fast-expanding company, or one that expands and contracts throughout the year to cope with periods of peak activity, it’s simple to add new user accounts and take them away again.
There’s also a clear security argument in favour of SAAS. Data and applications are stored off the premises in proper hosting environments with redundancy and failover, and backups are performed by professionals, minimising the risk of accidents. This could potentially save a business from catastrophic data loss. “I used to work as an IT manager for a small business, and one of the best decisions I ever made was to hide the company’s server in between two desks. When the company’s offices were burgled, the thieves didn’t find the server and thus didn’t steal it. If they had, the company would have been finished,” explains Bradshaw. “We had backups, but we later found that most of the backups had failed.”
The past five years have seen several important changes: broadband is cheap and widely accessible; the cost of storage has plummeted, reducing the cost of hosting all the data involved; and both small and large businesses are more open to the idea of their data and applications residing off-site, making SAAS an attractive proposition.
However, not all client applications are suitable for SAAS. Some don’t necessarily scale well, while others don’t always have the right interface or deliver the operational performance to work via a remote desktop interface or a web front end. The key is always to trial an application, even if it’s an SAAS version of something you’re already using.
The products we’ve looked at are likely to be most effective in a small business (fewer than 25 users) or single-user situation, where there’s less cultural resistance to overcome. That isn’t to say they should be entirely avoided by bigger businesses, especially since all three are still evolving. They also only lend themselves to static workers – those who do their work at a regular internet-enabled desk location. While a few SAAS providers offer client-side caching of apps to allow offline work, this remains problematic and rare.
The clinching factor for many small businesses, however, will be cost. If you just need basic office tools, even the complete enterprise-grade Premier Edition of Google Apps costs only US$50 per head per year. That easily undercuts client licence prices for a Microsoft Office suite. At the very least, it’s worth experimenting with the free editions to see if they suit your business. You genuinely have nothing to lose.
The upper echelons
Almost all of the SAAS solutions we’ve discussed are actively deployed in real businesses – and not only by SMEs, but by large organisations.
A typical example of this is global conglomerate Procter & Gamble. The company is currently evaluating Google Apps, in particular the email component, as an option for parts of the business. By reducing the number of client-side applications that need to be installed, updated and repaired, the company expects to make a significant saving.
“We see huge potential for these applications in a large enterprise environment such as ours. We’ll work closely with Google in shaping the enterprise characteristics and requirements for these popular tools so they can better suit the enterprise user,” says Laurie Heltsley, director of computers and communications services at Procter & Gamble.
General Electric, which is involved in everything from financial services to jet engines, is also investigating how it can deploy Google’s hosted tools across its businesses.
“GE is planning to evaluate Google Apps for the easy access it provides to a suite of applications, and the way these applications can help people collaborate in a conventional workplace as well as in the field,” says Gregory Simpson, chief technology officer at GE. Part of the appeal of the Google software is that staff are already familiar with Google and its software, especially Gmail and Google Calendar.