What is Software as a Service, SaaS? …and PaaS …and IaaS

in this video I want to answer the
question what is software as a service
[Music]
there have always been a lot of models
for how we can buy stuff we can buy it
out right or we can take out a lease to
spread our payments but retain
responsibility for maintaining it
or we could take out something like an
operating lease where we effectively pay
someone else to maintain it and we get
the benefit of using it
today software is as important a part in
running our world as buildings and
trucks and tools and machinery
so it's no surprise that we also find a
variety of different ways to pay for the
software that our businesses and
increasingly our private lives depend
upon
one of the commonest ways that we see
for paying for software these days is
software as a service or saas
but this is nothing more than a
particular way to pay access to a
software and a license that allows you
to use it
for those of us who are over 40 perhaps
the most familiar way of paying for
software and it's still widely used
is buying it outright
you pay the software company and they
deliver the software to you
either on some form of recorded media in
the old days or Now by download
you install the software and you can use
it in perpetuity
if you want to upgrade the software then
you can download the upgrades sometimes
for a fee but if you choose not to
upgrade it
then you can still continue to use the
software
until it stops working
the alternative to a one-time payment is
to pay by installments and software as a
service
is rather like a rental agreement
in the consumer world
in the corporate world it's very much
like an operating lease
in an operating lease or in a consumer
rental contract
you pay money to acquire the right to
use the asset whether it is piece of
equipment a car a building
or in this case software
but you don't own it
the advantage of this has however is
that in our operating lease model the
responsibility for maintaining the
equipment or in this case the software
remains with the Creator with the vendor
this means that the user gets
continuously updated software as part of
their payment agreement
for as long as you continue to pay for
the software
you get the latest possible version and
all the responsibilities for maintaining
it and fixing problems
remains with the vendor
so this leads us to a definition of
software as a service
software as a service is a software
distribution model in which a provider
hosts the software and makes it
available to customers over the internet
the provider takes responsibility for
maintaining it in exchange for a regular
payment stream for commercial software
there is usually also a service level
agreement which guarantees a certain
minimum level of service from the
software
software as a service is also known as
cloud computing
hosted software or on-demand software
the user gets access to the software the
service along with updates and
maintenance which keep it relevant and
competitive with alternative options
they receive a standard of service which
their business can rely upon
in exchange for a highly predictable
flow of expense
contrast this with either the model of
buying the software or of developing it
yourself and you'll see that the
expenditure flows which may be higher or
lower
are going to be a lot more predictable a
fixed amount per month or per year
rather than having to figure out when
you're going to have Peaks and drops in
expenditure
and unexpected expenditure when
maintenance requirements raise their
ugly heads
now this isn't a video about law but
let's have a look at some of the basic
features of software as a service
contract
typically the user buys a service on a
subscription basis with limited forward
commitments
typically your maximum commitment is to
the end of the current year
whose subscription costs are usually
dictated by two things
the level of service or functionality
that you need for your business and the
number of users that will be using the
software
by the way this means easy upscaling if
you acquire more staff who need to use
the software you just buy more licenses
if the nature of your business changes
and you need additional functionality
and then you upgrade the service levels
in return the supplier will maintain the
software they'll keep it running
properly and they will upgrade it
periodically in the background
without you having to do anything or to
make any changes
one of the principal benefits for the
user is that all the hardware on which
the software runs is maintained by the
supplier
the user doesn't need to maintain any
hardware apart from their own user
computers
typically once you have determined the
contract and the service levels within
it there will be no additional fees for
maintenance support
and upgrades
and usually the contract will specify
service levels like uptime for example
availability for more than 99.5 percent
of the time and also for things like
security and data management
so what types of software do we see
software as a service contract working
with well pretty much anything
office software like Microsoft Google
and Zoho
productivity software like Evernote
notion and click up
entertainment software like Amazon Prime
Netflix and Disney Plus
Enterprise operational and back office
software like sap Oracle and Salesforce
communication software like Zoom slack
and blue jeans
and project management software like
Monday Asana and jira
now in fact software as a service is the
most common of a spectrum of different
cloud-based Computing Services that we
find
and whilst if you're not in the IT world
you may not encounter these terms it's
probably worth giving you some
indication of what paas and iaas stand
for too
paas stands for platform as a service
platform as a service offers a remote
technology platform on which
organizations can develop their own
Solutions and later host them
this removes the need to invest in a
large I.T infrastructure
the network and the servers that you
need to host your software
this allows the organization to focus
its efforts on developing the software
it needs and allows them to scale their
deployment easily by procuring more and
more platform infrastructure as and when
they need it
so it shouldn't come as a surprise when
I tell you that iaas stands for
infrastructure as a service this allows
an organization to buy all of the
servers storage processing capability
networking that it needs to run its
entire business
iaas allows an organization to buy a
virtual Data Center
this means it doesn't need to invest in
any of the hardware any of the
infrastructure and any of the expertise
and support to run it
it just specifies what it needs and
raises or decreases its specification as
its needs change
so why use this model of procurement why
use saas paas or iaas what are the
benefits of software as a service
primarily software as a service removes
the need for an organization to install
the software that it needs and to
maintain that installation it gives them
predictability of cash flow as well it
can also reduce costs and by reducing
the need for infrastructure and for
skilled expertise
that skilled expertise resides with the
supplier who can gain massive economies
of scale by training up the people it
needs to serve multiple customers
and there is flexibility too
the buying organization can either dial
up or dial down the amount of service
and the number of seats that it uses
as its business either grows or
contracts
end users can also get a better
experience
there is absolute repeatability they get
exactly the same service wherever they
sit
and often with software as a service
platforms you can use the software in
Mobile form as well as on desktop
the scale of software as a service also
means that the provider gets lots of
user intelligence and has the economies
of scale that allow it to develop their
software and grow its capability and
improve its functionality rapidly and
effectively
and with a dedicated expert team they
can typically resolve bugs and
maintenance issues quickly and
effectively too
so in summary the buying organization
gets reduced costs of Hardware of
infrastructure and premises they get
quick effective and inexpensive setup
controlled and scalable costs and highly
predictable cash flows
automatic maintenance and updates and
reliable service levels
software that runs on multiple device
types and different operating systems
and often the ability to customize or
white label the service so if it appears
bespoke to them white labeling is the
ability to take the service that you get
and to put your own badge upon it
this can be as simple as rendering the
colors to match your corporate brand and
sticking logos on the corner of pages
or it can be a sophisticated as
tailoring workflows and processes
to fit your operational structures
all of this of course sounds really
Dandy
so well what are the downsides of
software as a service
because if there aren't any downsides
why don't we all do that with every
single piece of software
well of course you know that there are
going to be some disadvantages that
you'll be weighing against the benefits
firstly there is the question of data
ownership
will you exclusively own all the data or
will they
or will your agreement mean that there
is some shared ownership
and typically more important still is
data security
where is your data being stored
is it being stored in your own
jurisdiction or another jurisdiction and
what are the standards of data
protection
that the host offers
are there legislative or regulatory
requirements that this supplier may or
may not be able to meet
and critically what are the protections
against data breaches or calamitous data
losses
and what about data location where will
the data be stored physically
is it secure
and where is it geographically
what is the political environment of the
location where it's stored
which brings us on to the stability of
the provider how confident can you be
about the long-term viability of your
provider because not only are they
storing your data but often critical
business operations will depend upon
your access to this service
and even if your provider has long-term
stability
what about your confidence in their
long-term business strategy
what kind of decisions might they make
in the future that could impact upon
your business to a large degree a chunk
of your business is in their hands
even if they do something as simple as
making a big update that can require
potentially retraining of your staff
which could be costly and disruptive
and finally what are all the business
oriented technical questions that you
need to ask and get good answers to
your operational teams and your I.T
experts need to be articulating a whole
series of questions about access
sponsor times customization and process
and you need to get good answers to
those questions before you proceed
like so many things software as a
service is a brilliant business model
that has huge benefits
but it also has other implications
and as a business person you and your
colleagues need to investigate the
balance of advantages and disadvantages
for making your decision
[Music]
please do give this video a like if
you've enjoyed it or learned from it
I'll be making loads more great
management courses videos for you so
please do subscribe to the channel and
hit the Bell so you don't miss any of
them I look forward to seeing you in the
next video and in the meantime
keep learning