Understanding SaaS Enterprise Applications

In spite of the proliferation of discussion about cloud computing, there is still an enormous amount of confusion and misperception about Software as a Service (SaaS) deployment options for enterprise applications. This is often fueled by industry ”experts” and the solution providers themselves using the same terms with different definitions of cloud, SaaS and multi-tenancy. While it is important for buyers and users of enterprise applications to understand the terminology being bandied about, it is even more important to be asking the right questions to make sure their specific goals and requirements will be met. It’s less about the labels and more about the characteristics that are needed to meet these objectives.

Cloud versus SaaS

There is still much confusion over cloud and Software as a Service (SaaS) delivery models and the more discussion in print and online, the cloudier the issue becomes. This confusion prompted Mint Jutras to conduct an online survey to assess the level of understanding of SaaS and determine preferences for deployment models for a variety of enterprise applications. Many use the terms “cloud” and “SaaS” interchangeably, but indeed they are not the same. Therefore in this recent survey of representatives from over 300 participating companies, Mint Jutras was very clear in defining how the two terms would be used in the context of the study. The distinction is quite simple and need not be over-complicated.

As a prelude to the survey and for our purposes here, we use the following definitions:

  • Cloud refers to access to computing, software, storage of data over a network (generally the Internet.) You may have purchased a license for the software and installed it on your own computers or those owned and managed by another company, but your access is through the Internet and therefore through the “cloud,” whether private or public.
  • SaaS is exactly what is implied by what the acronym stands for: Software as a Service. Software is delivered only as a service. It is not delivered on a CD or other media to be loaded on your own (or another’s) computer. It is accessed over the Internet and is generally paid for on a subscription basis. It does not reside on your computers at all.

Using these definitions, we can confidently say all SaaS is cloud computing, but not all cloud computing is SaaS.

 Multi- versus Single-Tenant

Much of the discussion and debate over SaaS enterprise applications focuses on whether the SaaS applications are single- or multi-tenant solutions. In spite of the escalated level of chatter over this distinction, 57% of our survey respondents admit they do not understand the difference between the two. While 34% don’t seem to care (leaving that for others in their company to worry about), 23% admitted to not understanding but asked, “Please explain.”

Because subsequent questions asked about preferences between these two “flavors” of SaaS, it was important to present definitions of both. Again we kept it simple and we did not lead the survey respondents (or the reader here) with a conclusion that one is better than the other. You will find some industry observers that passionately insist SaaS solutions must be multi-tenant in order to be “true SaaS” and some offer quite a long laundry list of conditions that must be met before they will anoint a solution to be what they consider truly multi-tenant.

The definitions presented were much simpler:

  • Multi-tenant SaaS: Multiple companies use the same instance of (hosted) software. Configuration settings will vary per company and data is protected from access by other companies (tenants).
  • Single-tenant (or Multi-instance) SaaS: Each company is given its own instance of the (hosted) software.

These were presented to all survey participants, but for those who indicated they knew the difference, we went on to ask if they would agree with our definitions. The majority (65%) fully agrees with this definition. An additional 31% generally agrees but might slightly modify or add more qualifications. But when asked to present their own definitions we discovered more confusion. Some confuse multi-user applications with multi-tenancy. Others confuse access (presumably through cloud computing) over a distributed environment with SaaS and some voiced opinions on one or both but did not define either. Yet a certain level of understanding is a prerequisite for making good decisions.

Decisions, Decisions: How to Deploy Enterprise Applications

So how are decisions about deployment options made today? For many this is not a singular decision that is applied to all different types of application. Forty-one percent (41%) say the decision will vary from application to application even though many have “standards” defined for either all applications or selected applications (see sidebar). But “standards” can mean different things including which packaged software is selected, master data management, as well as deployment options. The vast majority (93%) feels these standards do however have some impact on deployment options that are chosen and about half (49%) feel SaaS options make standards easier to implement and enforce.

Conflicting Views: The Experts Versus the Consumer

Many experts today insist on multi-tenancy, however this choice has more impact on the vendor than the consumer of the software. Maintaining a single copy of the software instead of a separate instance for each customer means far less cost and effort for the solution provider. These savings can translate to lower cost and/or more innovation for the end user of the software but many of those end users only see the limitations, which they assume multi-tenancy imposes. Few have defined either multi- or single tenancy as a preferred option and single tenancy seems to have a slight lead in consideration.

But is that because they assume limitations of multi-tenancy that may or may not be real? And while the “experts” might be pushing multi-tenancy, is that really the question users should be asking?

Presumably the added efficiency of multi-tenancy allows the solution provider to focus more resources on improving the technology and developing more features and functions, which directly benefits its customers. That translates to more innovation delivered. But if the solution provider makes the same solution available on-premise, the frequency of releases may be constrained by its customers’ ability to upgrade frequently. So perhaps instead of asking whether the solution is multi- or single tenant, the better question is, how frequently is the software updated?

Is there a perceived downside to multi-tenancy? Yes, there can be. Many assume that a multi-tenant environment equates to “plain vanilla” applications that cannot be modified or tailored to their own needs. That may have been the case years ago when customizing software meant modifying source code, but today’s modern technology allows a tremendous amount of configuration and personalization without ever going near source code. So perhaps instead of asking whether the solution is multi- or single tenant, the better question is, what level of configuration, tailoring and personalization is supported?

Another potential concern over multi-tenancy is the perceived loss of control over the upgrade process. Indeed in a multi-tenant environment, the customer often has little control over the timing of the upgrades. However is there really a negative impact? If the solution provider bears the burden of the effort associated with upgrading and innovation is delivered in such a way that the customer may optionally choose to take advantage of an enhancement – or not – then there is no down-side and a lot of up-side.

Yes single tenancy potentially affords you more control over the timing of an upgrade, but there are other ways to exert control. Some vendors will actually support multiple versions in a multi-tenant environment. So perhaps instead of asking whether the solution is multi- or single tenant, the better question is, how is the upgrade process engineered and executed and/or whether all enhancements are designed to be “opt in,” only visible to the users when the customer chooses to turn them on?

These are just some examples of how to ask the right questions to make sure the SaaS solution, whether it is single or multi-tenant, meets your needs. Watch for more highlights about SaaS enterprise applications to make sure you are asking the right questions.

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One Response to Understanding SaaS Enterprise Applications

  1. Pingback: 4 Terms You Must Understand About SaaS Enterprise Applications

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