Software as a Service (SaaS) – A Cost-Effective and Fast-to-Implement Delivery Model

Pavan Kumar

In the late 1950s, there was a huge demand for people with programming experience. The use of computers for business applications was also rapidly expanding. This was the period when software as an industry came out of its shell. Over the decades, the software industry has raced ahead, exposing entrepreneurs to new and tremendous opportunities to serve this expanding market. Talking about opportunities, the last decade has seen a huge change in both, enterprise and consumer software businesses. Today, there is a substantial increase in the demand of business models that move away from traditional blueprint designs and are ready to adapt approaches in response to change. This can be seen in the gradual change in focus from a product-centered business to a service and maintenance business.

Another key contributor to this change is the internet that has not only increased demand for services but also allowed the appearance of new business models. These changes eventually led to the birth of SaaS. Generally associated with business software, SaaS is perceived as a low-cost way for businesses to obtain the same benefits of commercially licensed, internally operated software, without the associated complexity and high initial cost. Today, SaaS has grown and accepted by a wider audience that understands the huge cost saving benefits of a software subscription model.

What is SaaS?

According to Webopedia.com, “SaaS is a software delivery method that provides access to software and its functions remotely as a Web-based service. SaaS allows organizations to access business functionality at a cost typically less than paying for licensed applications since SaaS pricing is based on a monthly fee. Also, because the software is hosted remotely, users don't need to invest in additional hardware. SaaS removes the need for organizations to handle the installation, set-up and often daily upkeep and maintenance. Software as a Service may also be referred to as simply hosted applications.”

By implementing SaaS, organizations are paying for software applications for actual usage, rather than purchasing specific licenses for each user. SaaS matured to a high level of acceptance and usability in the software industry for growing customer base, which realizes the cost-saving benefits of a single software subscription model. Superseding earlier delivery models, such as Application Service Provider (ASP), On-Demand and Utility computing, nowadays, SaaS has become the industry preferred delivery model.

Increasingly, more and more SaaS applications are being developed by software vendors and service providers to meet evolving customer needs. The reasons that support the on-demand model of the application delivery to gain momentum are increased internet connectivity, improvements in remote access technologies, general increases in computing power, and application streaming.

Customers who have little interest or capability in software deployment but do have substantial computing needs are patronizing Saas-based software applications; the reason being inheriting the benefits of this model with least deployment overheads.

Key Characteristics of SaaS-based Software

The key characteristics of SaaS-modeled software are

Applications with web-based access  
Commercially availed and managed (i.e. not custom) software activities, which are managed from a central location rather than at each customer's site
One-to-many modeled, single instance, and multi-tenant architecture web applications, which can be remotely accessed
Applications with centralized architecture, management, and feature updating -- obviating the need for downloadable patches and upgrades

Gartner, an information and technology research and advisory firm, forecasts SaaS to grow at 22.1% until 2011 for the aggregate enterprise application software markets i.e. more than double the 9% growth rate expected in the market as a whole. “By 2011, 63% of products in the software infrastructure market and 56% in the software application market will support web services and Web 2.0 technologies,” Gartner predicts.

The staying power of SaaS has developed from several reasons:
A Low Cost Application – SaaS application rollout can be done in stages. The risk is low even if it fails. In addition, the company does not have to involve its IT staff for the rollout
Low Monthly Budget Maintenance -- Clients pay for the software on a monthly basis. So, the financial risk is less compared to traditional means
Secure Data Environment - Most vendors understand that data must be backed up religiously, and security should be given top priority to protect the interests of their respective clients
Responsibility of the Vendor -- If the vendor's software is broken, the vendor would not continue to subscribe the service for long. So, the vendor is motivated to fix the problem
No In-house IT Overheads – Applications run securely at the vendor’s location. Clients need not rely on their IT departments to install the same

Investment in SaaS-oriented Application

For SaaS, the economy of scale is an important business rule. Therefore, SaaS applications are built to scale well. The operating costs drop for each customer as more customers are getting added. As the number of customers crosses a certain threshold value, the SaaS provider develops multi-tenancy as the core competency leading to higher-quality offerings to the client at a lower cost.

SaaS applications are generally priced on a per-user basis. Even companies with relatively little number of users can afford these applications. Additional fees for extra bandwidth and storage is often charged by the vendors who have SaaS as their mainstream business. Initially, SaaS revenue streams are lower than traditional software license fees, which usually are exorbitant amounts. SaaS application selling strategy includes recurring revenue; this is viewed as more profitable, much like maintenance fees for licensed software. This strategy not only instills customer loyalty but also effectively ties clients to the vendor company’s services for a longer period of time.

iEmployee – A Pioneer in SaaS Application Category

iEmployee, one of the top 10 HRMS providers in the US, through its on-demand workforce management solution have its clients look at their ROI not only in terms of cost savings, but also its customized user interfaces, faster ramp-up times, improved access to information and technology transformation. Founded in 1989, iEmployee is the first in the HRMS and Time & Attendance market to offer 100% web-based on-demand workforce management solution. iEmployee clients do not require to spend on any IT overhead or investment, such as hardware, software, licensing, and database administration to run iEmployee on-demand workforce management solution.

SaaS Implementation at iEmployee

The four entities, which are strategically designed to successfully implement SaaS in iEmployee’s product development are

Implementing Single Application Architecture (SAA)
iEmployee, which is designed to seamlessly integrate multiple functions of HRMS, is based on SAA. This kind of integration helps to address problems faced by today’s organizations – integrating separate systems and moving data between them quickly and efficiently. The SAA was conceived keeping in mind that HRMS is a dynamic corporate function and hence, there will be frequent changes which are rigorously monitored through Product Development Life Cycle (PDLC) and Change Management Process (CMP).

Following customized Product Development Life Cycle (PDLC)
iEmployee’s customized PDLC is developed through its constant Business Process Reengineering (BPR) exercises. The idea of having a PDLC instead of a Software Development Life Cycle (SDLC) is primarily to keep the integrity of the product intact, when there are thousands of users already accessing the application. Within the ambit of Rational Unified Process (RUP), since the Initiation and Elaboration phases are much longer in a PDLC as compared to other industry-recognized SDLCs, by default, these phases have to be driven by Product experts. The team of product experts, at iEmployee, is called the Product Management Group (PMG) and comprises highly technical people with domain expertise and client-interaction exposure.

Using .Net Architecture
Microsoft’s .NET architecture offers a few major benefits like Speed & Reliability, Improved Interoperability with other devices, and Longer Product Life. .Net is the backbone of iEmployee’s robust and complex build.

Providing High-Level Security
iEmployee keeps Client’s data completely secure and 100% confidential. To ensure this, iEmployee provides the added protection of automatic password encryption. The other features which value-add to iEmployee security are Secure Socket Layers (SSL), 128-Bit Data Encryption, Firewalls, Redundant Servers, Offsite Backup, and On-Demand High Bandwidth.

iEmployee’s Product Management Group

The Product Management Group (PMG) at iEmployee is responsible to ensure that the sanctity of the primary application is not compromised while parallelly addressing client requests. The team gathers requirements, which are needed to be drawn to the minutest detail as possible and then map them to the project through detailed specification documents.  The on-demand model puts customer needs in prime focus and takes extreme challenges of delivering client requirements to new levels with speed and accuracy. The PMG ensures that there will be a constant coordination among delivering what the client requires, the time-to-market, and keeping the quality of the software to its best.

Clients’ Queries about SaaS Concept – iEmployee’s Solutions

Listed below are a few client dilemmas that are answered by the PMG group.



Client: Recently, one of the big software giant’s SaaS-based Web application turned out to be a disadvantage for all its users when the server that verified its users went down and began to disable proprietary platforms around the world. This does not give a positive feeling about web-based applications. Please explain?

Amit Makwana, Product Manager (Time Management & Expense Management) at iEmployee says, “Such problems normally occur due to the wrong updates to the live server. At iEmployee, every change to the application has to undergo rigorous testing phases. iEmployee follows the process of multiple checks for any changes made to the functionality, code, etc, of the application. The modified build is deployed, tested, and verified in more than one cycle in two or more instances on testing and staging servers. Because of this, the data, code, and any other modifications get into iterations of multiple validations, which results into avoiding potential vulnerabilities. Hence, such problems happening at iEmployee is very rare.”

Client: If something goes wrong at the vendor’s end and they have less ability to fix it quickly, what happens next?

Ramesh Yelanki, Product Manager (Human Capital Management & Third-party Interfaces) at iEmployee says “iEmployee follows a detailed PDLC to ensure that the system does not crash under any circumstances. A customized PDLC was developed and kept in place to support the project activities. In case of urgency, the detailed set of processes may cause unexpected delays. Hence, to resolve urgencies, a different process framework i.e. a mini-PDLC needs to be available to resolve issues prestissimo. At iEmployee, urgent issues are generally marked as ‘Critical Alert.’ Whenever a Critical Alert is declared for an issue all those employees responsible for that issue need to follow mini-PDLC immediately to resolve the issue and to make sure that the application returns to its normalcy promptly. This way, client urgencies or application failures can be addressed with least response time.  Hence, at iEmployee, something going wrong is very remote.”

Client: If something goes wrong at the vendor’s end and they have less ability to fix it quickly, what happens next?

Ramesh Yelanki, Product Manager (Human Capital Management & Third-party Interfaces) at iEmployee says “iEmployee follows a detailed PDLC to ensure that the system does not crash under any circumstances. A customized PDLC was developed and kept in place to support the project activities. In case of urgency, the detailed set of processes may cause unexpected delays. Hence, to resolve urgencies, a different process framework i.e. a mini-PDLC needs to be available to resolve issues prestissimo. At iEmployee, urgent issues are generally marked as ‘Critical Alert.’ Whenever a Critical Alert is declared for an issue all those employees responsible for that issue need to follow mini-PDLC immediately to resolve the issue and to make sure that the application returns to its normalcy promptly. This way, client urgencies or application failures can be addressed with least response time.  Hence, at iEmployee, something going wrong is very remote.”

Client: How does a SaaS provider configure customization requests of user organization (tenant companies) in the application without affecting other tenants?

Gautam Vyavaharkar, Team Lead (Time & Expense Modules) and Darshan Bhaskaran, Team Lead (HR & Benefit Modules) says, “The prime responsibility of a Product Management Group within a SaaS organization is to evaluate the need and return of investment of each change request brought forward by user organizations, end-users or tenant companies. If the request is specific, at the time of conception and elaboration phases of the product functionality, Business Analysts conduct a thorough study on how to make the required functionality most generic with configurable parameters to incorporate all usability scenarios. Hence, the product can be configured to the requirements of the user organizations who have requested the change, while keeping the same transparent and distant from organizations that does not need the change.”

Advantages of using iEmployee

“iEmployee is a complete web-based subscription service that gives small to mid-sized companies comprehensive tools to track Employee Time and Attendance, Expenses, HR, Benefits, Scheduling, and Real-time reporting with database integration quickly at low cost and with minimal risk” says, Pavan Kumar, Sr. Technical Writer at iEmployee.

Benefits of iEmployee as a SaaS-based application includes

  • 100% Web Based - A complete web-based HRMS, Time & Attendance self-service product on the market
  • No IT Investment - iEmployee is designed and built from ground up as a web-based software application
  • Easy to Use - Designed for use of both technical and non-technical staff
  • Risk Free - Can be rolled module-wise and available free of charge for a limited period of time
  • Cost Saving - Offers low overhead and a guaranteed substantial return on client’s investment  within the first few months of using it 
  • Payroll Independence - Switch payroll solutions without the cost and logistics of investing in a new HRMS
  • Quick Implementation – Easy and understandable wizards, well-structured and easily customizable GUI makes it easier to train employees quickly and efficiently, while at the same time implementing cost-cutting strategies
  • Shared IT Management – iEmployee facilitates IT operations, data center management, application management, and database administration be shared across multiple users.
  • No Maintenance – Clients using iEmployee, a web-based On-Demand Workforce Management Solution, need to neither download any software nor worry about the software upgrades or aging technology.
  • Shared Technology Infrastructure – iEmployee facilitates its clients to realize efficiency gains through better use of data centers, processing and data storage capabilities through pooling resources usage across multiple companies.
  • Single Application Architecture -- iEmployee is not an integrated package of applications. Its unique design is based on SAA and addresses the biggest problem facing organizations today – integrating separate systems and moving data between them quickly and efficiently.
  • Electronic Data Interface (EDI) -- For efficient and faster communication, iEmployee has designed a system called EDIs. These establish direct data communications with some of the leading benefit providers, insurance carriers, accounting software packages, and payroll providers. Interfaces are developed on demand and are customized separately for each client.

  • With years of software development experience, industry know-how, and customer expertise in the most demanding conditions over thousands of implementations, iEmployee -- as SaaS -- stands up to the most stringent customer requirements.

    iEmployee as an On-demand Workforce Management Solution, introduces new features time-to-time, depending on customer requirements, reduces Total Cost of Ownership (TCO) and investment risk to clients, and offers per-user "use-based" pricing methodology.

    This article is written by Pavan Kumar, Sr. Technical writer, iEmployee.








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