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by Beth Stackpole, Contributing Editor   Deployments take only a week and require no sizable start-up fees, no costly server or networking hardware. You are billed only for the software modules in use and the number of employees accessing the system, and are automatically upgraded to any new releases. Sound too good to be true? Not according to proponents of a new way of delivering enterprise software, dubbed software as a service (SaaS), or "on demand." This method, popularized by upstarts like CRM provider Salesforce.com, forgoes traditional software licenses and on-premise deployment in favor of applications specifically built to be delivered on a subscription basis over the Internet. While the concept has been around for a while, the latest generation of hosted software leverages Web services and other emerging Internet technologies to offer economies of scale and productivity advantages not possible with earlier iterations from ASPs (application service providers) in the late 1990s, proponents say. Manufacturers considering SaaS should step carefully, however. SaaS vendors offer several different online delivery models, and not all approaches make sense for all application types, or all companies. Potential SaaS customers should also carefully consider start-up costs -- not just per-seat rental charges -- before signing up, experts say. Most pure-play SaaS providers support what is called a multi-tenancy model, where one instance of the software and data model is provisioned to multiple customers. This, advocates say, is the key to delivering SaaS benefits such as low cost and scalability. Traditional vendors, on the other hand, argue that a single-tenancy set up (one server and license per customer company) is essential to delivering the high levels of security, integration, and customization that manufacturers require for mission-critical, enterprise applications. As it turns out, both options have merits, depending upon the application and the manufacturer's needs. Applications that manage extended processes like supplier collaboration, transportation management, or, to some degree, product development, can be good candidates for multi-tenancy SaaS, experts say. But transaction-oriented, internally focused systems like ERP are less compatible with this delivery method, particularly in large enterprises. That's because transaction-oriented applications like ERP often require high levels of security and integration that typically can be better supported in an on-premise or single-tenancy SaaS model, where each application is given its own hardware and database. Moreover, if the long-term plan is to bring the application in-house when IT resources free up, experts say a single-tenant solution is probably a better interim choice. To ensure that a specific style of hosting arrangement works to their advantage, manufacturers can take numerous steps, including conducting security audits and requiring service level agreements (SLA) as part of the contract. A Louder Buzz Whether deployed in multi- or single-tenancy fashion, SaaS is catching on. And the buzz surrounding it has not been lost on traditional enterprise software vendors such as SAP AG, Oracle Corp., PTC, and Agile Software Corp., which have announced Web-based flavors of some of their applications. However, unlike the pure-play SaaS providers, many of these companies have opted for traditional hosting arrangements, in which each customer is outfitted with its own license and server infrastructure that a third-party oversees, either on or off site. Others, like SAP, are embracing a hybrid approach that combines the benefits of both single- and multi-tenancy models. Page : 1 2 3 4 ... NEXT |