Before we have a tendency to deep live into the globe of SaaS, allow us to first try and outline and to clarify what’s really meant by the SaaS business model. Throughout the analysis, it became clear for us that giving one explanation is unfeasible. What‘s additional, Google finds quite 60 totally different potential definitions of what SaaS is or may be.
“Software as a service is a model of software deployment whereby a provider licenses an application to customers for use as a service on demand…” (Software as a Service, 2010)
“Software as a Service (SaaS) could be a package distribution model during which applications are hosted by a merchandiser or service supplier and created on the market to customers over a network, generally the Internet…”(Software as a Service, 2006)
“Software as a Service, SaaS could be a package delivery technique that gives access to package and its functions remotely as a Web-based service…” (SaaS, 2009)
“In the package as a Service model, the applying, or service, is deployed from a centralized information center across a network – web, Intranet, LAN, or VPN – providing access and use on a revenant fee basis.”(Software & data associate degree business Association (SIIA), 2001)
Here above, simply few definitions, taken from the highest ten ranking in Google search. A rough analysis of the various SaaS definitions shows that everyone among them has following aspects in common, as for example, Web-based service model – provided over a network – fee-based.
Origin of SaaS business model
In order to travel searching wherever the package as a Service originates from, we’ve got a bent to possess to dig extremely deeply at intervals the chronicles of the pc science. We’ve got an inclination to travel back in time till 1961, once John McCarthy postulated throughout a speech at Massachusetts Institute of Technology, for the first time the thought of utility computing. The idea was based on the commoditization of the electrical grid in order to distribute the services publicly in a more efficient and cost effective way.
Firstly, software system as a Service could be a multilayer model, existing of associate degree infrastructure as a service (IaaS) and platform as a service (PaaS), complemented by the applications developed and in hand by the service supplier. The previous element exists of networks, servers, storage and application programming interface, that square measure liable for enabling convenient, on-demand access to computing resources. Enriching IaaS with middleware, that connects the application code with run-time infrastructure, one creates the PaaS. The latter allows interoperability between the infrastructure, various operating systems, and hosted applications.
Secondly, the customers use the software on the subscription base, on conditions negotiated in the contract and receive in return service promised in the Service Level Agreement. Furthermore, the users take the advantage of the interconnectivity with the server in order to utilize the applications independently of their location. Next important issue in SaaS is a one-to-many idea, which suggests that a regular package of applications is provided to as many shoppers as attainable minimizing the customization. As a conclusion to the synthesis we have a tendency to create here higher than, we’ve got developed our own comprehensive definition of a software system as a Service business model, which sounds as follows:
Software as a Service is a multilayer business model, enabled by IaaS and PaaS, which allows the provision of the application to the customers over the network on a subscription base, following the one-to-many principle.
SaaS: Analysis of Business Model components
Before we have a tendency to begin the analysis of SaaS Business Model in and of itself, allow us to initial produce a shared understanding of what a business model truly is. So as to accomplish this task, we have a tendency to create a use of a Business Model.
- Key resources are the crucial tangible or intangible assets, which allow an enterprise to create and offer a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenues.
- Key activities are the foremost vital actions a corporation should fancy operate with success, and that area unit necessary to make and supply the worth Proposition, reach markets, maintain client Relationships, and earn revenues.
- Key partnerships are the network of suppliers and partners, meant to optimize the postulated business model, bring home the bacon economies of scale, scale back risk and/or acquire specific resources and activities.
Value proposition building block incorporates the bundle of product and services that make the price for a selected client phase, determination specific client drawback or satisfying a selected client would like.
- Customer segments building block describes the audience, being completely different teams of individuals or organizations that enterprise is targeting and reaching to reach.
- Channels include the company’s marketing and distribution strategy, required to communicate with and to reach the Customer Segments in order to deliver the intended Value Proposition.
- Customer relationships comprise the links a corporation tries to determine between itself and its completely different client Segments.
- Cost structure includes all the prices incurred to control a business model.
- Revenue streams are the revenue flows or money, generated from every client section.