In-depth: The ABCs of software as a service

Office as a service
Microsoft is introducing SaaS to customers with the line "Software plus services". A customer can choose to buy Microsoft products in the conventional way, buy them as a service or - and this seems to be the vendor's preference - buy a bit of both.

Microsoft and other vendors such as Symantec and M86 frame this approach as one of choice; a customer can choose whatever combination of hardware, software or software service from the one vendor best suits their business needs.

"The industry is not moving wholesale to the cloud," says Carraro. "Our customers tell us they still prefer the rich offering environment that is given on a local desktop - there is no lagging, [for example]. But to access that app on the web is very appealing when I am travelling."

He suggested a scenario where a company's headquarters might have an Exchange server but the remote offices use Exchange Online.

Carraro says that although Exchange Online and Exchange Server are functionally similar, on-premise software still has its own appeal.

Microsoft's on-premise software can be customised to a greater extent than Exchange Online; some industries such as legal and finance, may have specific retention models around email for regulatory purposes which require on-premise software; and some companies might prefer to know their data is stored in-house rather than Microsoft's servers, says Carraro,

"I think this hybrid model is a richer model rather than have a one-size-fits-all that some of our competitors are offering," says Carraro. "It really is a cost versus control element. If you want to optimise for cost you are likely to go online. If you want to optimise for control you will stay on-premise."

With document and application compatibility becoming less of an issue online thanks to broader internet standards, the shift from on-premise software to software-as-a-service could see other vendors snatch market share from Microsoft. Google and IBM spring to mind, but Carraro isn't worried.

He says Microsoft has a "comprehensive, end-to-end strategy that covers the developer platform, business software, consumer online and social interactions. If you look at some of our competitors they can compete with some of our offerings but when you embrace the entirety of our offering, there is no one there."

Such suite competition
There's one company that's not banging down the door to talk about its SaaS products. It might have something to do with it being the best known provider on the market. Google has 146 million users of its advertising-supported email application, Gmail, and anyone who has used the internet is likely to have used its search engine.

With such a huge customer base, it's surprising that the online search giant has been relatively noncommittal about setting up a channel to sign up businesses to Google Apps and other products.

Google has always targeted the consumer space foremost with its beta products, although it does have a direct sales team that competes against Microsoft for large email and productivity suite deals.

Google does have Google Apps resellers in Australia but the company is reluctant to say how many resellers it has or even list who they are.

Two well-known names are Devnet and national integrator SMS Technology.

In an unusual move Novell is looking to piggyback the search giant's beta Wave application with its upcoming social networking suite, Pulse. The suite targets enterprise collaboration and aims to bring features from consumer platforms such as Facebook and Twitter to the workplace while adding security and IT management, according to the company.

Pulse promises to "match the rhythm of how people and teams want to work" - a big claim that Novell partners will hopefully be able to test when the limited beta release arrives this year. A sign of the times - Pulse will be available first as SaaS and later as on-premise software.

IBM is another strong contender for the productivity suite market. The vendor has updated its Lotus Notes online services which are particularly strong in the collaboration space.

When SaaS doesn't work
Vendors were unanimous in laying down reasons to avoid SaaS. There are none. At least, no good ones, and especially when it comes to email.

"For email there is really no reason" to choose an appliance or on-premise software instead of SaaS, says Websense's Lake.

"It is so compelling, the business case is very clear and the cost savings, threat protection, ease of implementation, usability, opex versus capex, being able to implement faster and easier, scaling... it is far superior to go with a hosted solution."

The main reason customers buy an appliance or on-premise software is not rational.

"There is an emotional decision more than anything," says M86's Hulse. Companies which have a strong tradition of supplying IT services in-house and suffer paranoia of third parties reading their email.

"The reality is we don't [read email], we can't," says Lake. Websense and other vendors carry ISO certifications, are audited twice a year to ensure clients' privacy is properly maintained and count financial and government institutions among their hosted email customers.

Some vendors don't yet offer the same level of granularity in reporting for SaaS products as their on-premise equivalents, but many have plans to standardise features.

Latency used to be an issue, particularly with web security, although this has largely been addressed, according to vendors. Technically there may be "a couple of milliseconds" lag in loading a page with a hosted service compared to an appliance on premises, however, this would not be noticeable to the end user.