The paper discusses how Software as a Service (SaaS) will be able to dominate the information management system in the future. The paper has highlighted some key benefits of SaaS which is responsible for the rapid rise of SaaS and the challenges that lie ahead for the information management systems.
The use of software as a service (SaaS) has been discussed in a lot of business conferences these days as the patterns and trends of the businesses indicate that the use, acquisition and role of SaaS has changed quite a lot over the year because of the changing business environment and technological advancements. These are also termed as "on-demand" software. They provide a delivery model in which data and software are hosted centrally on a cloud. SaaS has now become a common model of delivery for most of the business applications. SaaS is a part of all the leading IT companies.
Mike Wheatley an IT expert mentions that the use and acquisition of SaaS has shifted a great deal from a cost driven approach to a much wider role that is responsible for the efficiency of the business operations. This highlights that the role of SaaS has expanded as the enterprise are now more focused on reaping greater benefits from them instead of just going for the software that was cost effective to them. The dynamic changes in context to SaaS have many implications on the acquisition of SaaS and for the service providers. The implications are also there for the organizations and the top IT companies. (Wheatley, 2012)
There are several reasons for the SaaS are more likely to dominate the information management industry in years to come. The business requirements and needs that trigger the IT investments are now given more importance because the role of IT in the modern day organizations as most of the organizations consider IT to be there most important function which integrates all other functions of the organization therefore they lay much more emphasis on the IT requirements. The organizations have also realized that there are great benefits from acquiring SaaS.
The business environment is largely responsible for shaping up the industry trends and the businesses now are more focused on the concept of continuous improvement. All top organizations are focused on growing revenues by improving the profitability within the current structure rather than expanding as that will require more investment. This approach towards business has led to more emphasis on trying to improve the current business operations and making them more profitable which requires a critical influence from the IT department. The IT acquisition, management and use of the available resources play a key role in the management decisions.
The sales of SaaS have been increasing over the year which clearly reflects the trends and the future predictions of SaaS. Tom Mchall of the Gartner Group states that they reached $10 billion sales in the year 2010 and in three years time the sales have reached the $15 billion mark which is a 50% increase in annual sales. The main market for SaaS is the CRM (Customer Relationship Management) which is predicted to be the largest market for SaaS for many years to come. The Customer relationship market generated revenue of $3.2 billion in the year 2010 for SaaS, which has now increased to almost $4.5 billion in the year 2012. (Mchall, 2013)
SaaS providers that were operating on cost efficiency no longer seems to be profitable because they now have lost on their customers as the focus has shifted to more efficient SaaS regardless of the cost because it generates far more value for the company than its costs therefore the cost is no longer the sole criteria for the acquisition of a SaaS provider.
The industry is moving towards a much more 'Hybrid" approach which includes the combination of Cloud+on-premises offerings. The trends of the IT industry show that the on-premises have been declining in the past two years as the industry is shifting towards a Hybrid approach. This marks a challenging period for the IT enterprise with the rise of the pure play organizations demanding SaaS at a larger scale with better features because of the increasing needs of the businesses. The transitional phase in the IT industry is indicating that in the future Cloud-based software/solutions will be dominating the industry for the long run.
The short-term changes in the industry create a disruptive impact in the offering, approach and structure of the IT industry. These short-term changes also disrupt the expertise of the enterprise's ability to carry out business efficiently. The IT industry also requires massive investment in order to adjust to the transitional changes which are caused by the business requirements. The investment is required in the interfaces, customization, integration and security. Also there has to be a significant amount of investment on training as they need to learn new ways to manage interfaces and technologies.
The IT enterprises and businesses have realized the importance of understanding the future prospect of SaaS and have started preparations for using a hybridized approach in dealings as they will be used by most of the companies by the end of this year. Many companies have already formed a different unit which will be specialized in using and managing SaaS.
Cost savings as mentioned earlier are on the decline in context of SaaS on the contrary many medium sized enterprise do not have the initial investment required to setup an IT setup as it could be done by the large corporations therefore they are still focused on acquiring SaaS keeping the cost considerations as the main priority. The medium sized companies are also on tight budgets therefore they do not pay much attention to the long-term benefits of SaaS.
The medium sized businesses or the second tier business that have paid more emphasis on SaaS and realized its importance have greatly benefited by using it resulting in greater speed and cost reduction in businesses operations. Therefore even the small businesses have realized the importance of SaaS as it gives more efficient operations and saves a lot of budget especially in the long run. Such companies are usually the trend followers which are set by the large companies but they do not have an actual say in shaping the industry trends. However they are important to the IT industry because they can combine together to become a major profitable segment for them.
SaaS has also been criticized by some of the IT specialists on several grounds raising the question over its use and application in the long run. One such IT specialist is Richard Stallman who has notably criticized SaaS through his Free Software Foundation. He has stated that the use of SaaS is a violation of the free software principles.
Stallman has stated many justifications as to why he considers SaaS to be a violation of the free software principles. One of them is that SaaS users do not get the access or copy of many files including the executable file which is in saved on the server but cannot be used by the users. Therefore it makes it impossible for the user to change it or modify it to any degree. So the power of changing the executable file remains with the server operator who gets the access to all the data which is operated by the user. (Stallman, 2010)
Another criticism for Stallman states that SaaS can also be used as a Spyware which is unethical. The users are bound to send the data on the server if they want to use that data which creates the same effect of a Spyware as the server is the one who gets the data without actually making any special effort as…