The idea of selling software as a service rather than as licensed or on-premises products is slowly but surely moving beyond just being a mere rhetoric to a more serious business proposition. Indeed, the on-demand or Application Service Provider (ASP) model is now back in its new avatar as the SaaS model, after a temporary hiatus in the wake of the dotcom bust during 2001-02. SaaS, based on the concept of `pay-as-you-go', is an emerging software delivery model in which application software is delivered remotely through a subscription-based fee rather than being sold for perpetual use. Simply put, in this model, the users do not buy the license of the software, but only a right to use it. It means that the client organization pays for the actual usage of software applications rather than purchasing specific licenses for each user. This helps the client organization to avoid committing a large upfront payment in license fees. Since the users do not have to buy, install or maintain software or hardware, it cuts down the implementation timeall this translates into substantial cost savings for them.
According to Sharon Mertz, Research Director, Gartner, "Ease of use, rapid deployment, limited upfront investment in capital and staffing plus a reduction in software management responsibility, all make SaaS a desirable alternative to many on-premises solutions, and they will continue to act as drivers of growth." In fact, according to estimates by NIIT Technologies, one of the top-tier IT companies in India, which recently announced its plans to make a foray into the lucrative SaaS market, customers can avail a minimum of 30% savings in cost by adopting this model.
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