Leasing applications, as opposed to buying licenses, is gaining ground. Although it has many advantages, it is important to anticipate the risks inherent in this mode of IT consumption. To make the right choice, you need to start from the context and constraints of the company.
With an average annual growth estimated at 16% over the next three years by IDC, the SaaS market is doing well in France. It accounted for 15% of the software market in 2017 and is expected to reach 24% by 2021. In terms of volume, it is expected to increase from 1,937 million euros in 2017 to 3,528 in 2021. Why this display of numbers? It is above all there to demonstrate that if French companies were somewhat cautious at the beginning, today they doubt less and less and opt more and more for this software consumption model.
Renting rather than investing
The concept of SaaS or “Software as a Service” first appeared in an American magazine in 2001. In France, it was initially preferred another anglicism, the ASP for “Application Service Provider”. Although the details of these two models differ somewhat, their principle remains similar, SaaS being to some extent the culmination of the logic defended by the ASP mode.
The idea is relatively simple: rather than investing in hardware and software licenses and infrastructure, the company rents the use of applications hosted and maintained by a service provider, for a monthly and/or per-use subscription. This is why SaaS is considered an Opex (Operational Expenditure), which in itself is one of the advantages of this model.
The SaaS mode is in fact a service, the cost of which is an expense that is immediately deductible from the company’s income, whereas an investment (or Capex for Capital Expenditure) is deducted from the income through amortization spread over several years. In addition, Opex provides greater transparency: where the company would have had to invest heavily in infrastructure to deploy an application without necessarily having precise visibility on the ROI, the Service approach allows the company to pay only for what is consumed and to adjust its subscriptions to actual needs month after month.
Focus on business value added
SaaS and cloud are often equated. And for good reason! Software offered as SaaS is typically hosted in a cloud, administered by the publisher. However, SaaS and cloud do not mean the same thing: while SaaS provides an application, cloud is a much broader concept that allows the company to benefit from a complete infrastructure (IaaS or Infrastructure as a Service) and services ready to use or to integrate into the development of applications (PaaS or Platform as a Service).
In general, all these concepts have one thing in common: the company no longer needs to invest in its own infrastructure. Beyond the financial aspects, this approach makes it possible to entrust the IT “plumbing” to the service provider and to focus on the real added value of the IT business. Typically, rather than devoting resources to administering servers or updating applications on desktops, the company can use its IT resources to imagine and develop the services that will set it apart from the competition.
Gain in reactivity
Similarly, the company no longer wastes time deploying its own infrastructure before it can run an application. Once the subscription is taken, the software can be immediately exploited by the users. In practice, SaaS often requires configuration, if only to integrate the profiles of users authorized to access the software, but overall its implementation remains much faster than an internal deployment. Adding a new user is also quicker: you only need to take out an additional subscription.
In other words, the company is much more agile, it can more easily cope with load peaks by changing its subscription. And still according to the same principle, which is to pay only for what is consumed, it can also revise its subscription downwards after a workload peak during which, for example, it will have taken out additional subscriptions for service providers or temporary workers.
Mobility and accessibility
Another advantage, and not the least in the age of globalization and mobility, is that SaaS applications are in theory accessible from anywhere. A subsidiary in China? All you need is an Internet connection, a connected device and usually a web client to access the application. As a result, no matter what the mobile situation – salespeople in the field, logistics agents in the warehouse or simply passengers on a train – the user always has access to his work tools, from anywhere and at any time, as long as he has a connected device, handheld, laptop, tablet or smartphone.
Finally, the security of a SaaS infrastructure is generally far superior to that which a company deploys internally. Unless you are willing to spend a fortune on hardware, software and human resources for a risk that is only potential, and therefore with a very uncertain ROI, it is difficult for the company to compete with the measures put in place by SaaS providers who, by contrast, benefit from the advantages of mutualization to deploy solutions that are certainly very expensive, but whose costs are amortized by the number of users.
In addition, where many in-house applications lag behind on updates and patches due to lack of time and staff to apply them, SaaS applications are automatically updated by their provider, avoiding security breaches and, in the process, taking advantage of the latest innovations and feature additions.
Choosing the right provider and services
Today, few publishers do not offer their solutions in SaaS mode. Some, like Adobe, for example, have even switched completely from selling licenses to a rental approach.
While the advantages of SaaS are undeniable, it is important to emphasize its inherent risks, particularly in terms of the choice of providers. In fact, an application rarely works on its own and often requires integration with existing systems: it is essential that this integration be facilitated by the presence of APIs in particular.
In the same vein, the company has the right to change its mind: before committing itself, it is imperative to make sure that the subscription contract provides for the easy retrieval of its data, or even in some cases to transfer them directly to the new provider. The company must also anticipate all potential problems through contractual clauses, whether it is a service failure on the part of the provider, a drop in quality or even a complete shutdown following a bankruptcy filing.
In a logic of agilization of organizations, the ease of access to SaaS applications induces at the same time the possibility for the business to access the applications that are useful to them without the knowledge of the IT department. This is the phenomenon of Shadow IT, born out of the frustration of business people who too often hear the answer “No” to their requests from the IT department. However, this Shadow IT is not inevitable. It is up to the IT department to be a force of proposal and to put in place the “Single Sign On” and integration solutions that will enable it to keep control of these applications and new uses.
It is also important to know that storing the data used by the application in the cloud is not always a requirement. More and more SaaS applications are offering companies the option of keeping their data in-house, if only for regulatory compliance reasons.
Finally, SaaS, and more generally the cloud, are considered more economical models: this is by no means an absolute truth! An application used by many users 24 hours a day, 7 days a week, can be very expensive in SaaS since the billing model is based on usage.