SaaS in business: exploring strategic benefits and considerations of Software as a Service (SaaS) model in business organizations

SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations Than Htaik Aung Dissertação de Mestrado Orientador na FEUP: Prof. António Ernesto da Silva Carvalho Brito Faculdade de Engenharia da Universidade do Porto 2014-09-01 MASTER IN SERVICES ENGINEERING AND MANAGEMENT SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations Than Htaik Aung Master Dissertation Supervisor at FEUP: Prof. António Ernesto da Silva Carvalho Brito Faculty of Engineering of the University of Porto 2014-09-01 i Abstract Cloud computing has become a great shift in the way business organizations manage Information Technology (IT). Emergence of Software as a Service (SaaS) applications allows the business organizations to consider the possibilities of running a virtual business in which business functions are outsourced to cloud services. SaaS applications emerged as one of the advance technologies under the umbrella of cloud computing and is a great potential for the strategic management of IT in dynamic business environments. SaaS applications allow businesses to outsource IT as services that are more affordable and flexible. Traditionally, companies were required to purchase, setup and maintain their IT infrastructure regardless of exponential costs. SaaS model gives the companies an alternative to built, run and manage IT services on shared infrastructure via the internet. However, in order to achieve the potentials of SaaS, there should be a clear understanding of strategic management issues from the perspectives of IT service providers as well as the business-to-business (B2B) consumers of the IT. Despite several researches and publications in the technology context, there is still lacking the understanding of business and IT strategy issues surrounding SaaS model. This study scrutinizes the strategic values of Software as a Service (SaaS) model from the economical point of view. Firstly, this dissertation briefly studies the background and advances in SaaS model, and discusses the benefits of using SaaS for businesses and tradeoffs that they have to consider. The report explores the strategic benefits that can achieve by implementing SaaS in the business organizations, outlines some of the critical issues for the successful implementation of SaaS in enterprises, and finally issues a set of recommendations for the managers who will implement and manage SaaS within business organizations. Keywords Software as a Service, SaaS, Business Strategy, Strategic IT Management ii Acknowledgement I would like to sincerely thank my supervisor Professor António Carvalho Brito for his excellent assistance and invaluable insights throughout my thesis which I have enjoyed so much to work. I would also like to extend my gratitude to the director of the MESG program, Professor João Falcão e Cunha for helping me through my time at the Faculty of Engineering of the University of Porto (FEUP). I’d like to express my appreciation towards my teachers and colleagues in the MESG program, my Erasmus Mundus friends, the people I got to know during my stay in the beautiful city of Porto and Portugal which I can now call friends and my Burmese friends who are always supportive for me. Most importantly, this dissertation dedicated to my parents and family for their endless love, encouragement and motivation all these years. I could have not done any of this without them. Last but not least, I would like to give my heartfelt thanks to my best friend, Ye Win Thu, who particularly has always been supportive and encouraging me to pursue my dreams since we were in high school. You are my source of inspiration. Thank you all. Than Htaik Aung Porto, September 2014 iii Table of Contents Abstract ....................................................................................................................................... i Acknowledgement ..................................................................................................................... ii Table of Contents ..................................................................................................................... iii List of Figures ............................................................................................................................ v List of Tables ............................................................................................................................. v Abbreviations ............................................................................................................................ vi 1 Introduction ............................................................................................................................. 1 1.1 Overview .......................................................................................................................... 1 1.2 Problem statement ............................................................................................................ 2 1.3 Research Questions .......................................................................................................... 3 1.4 Methodological Approach ............................................................................................... 4 1.5 Document Outline ............................................................................................................ 4 2 Research Approach, Design and Methodology ...................................................................... 6 2.1 Research Approach .......................................................................................................... 6 2.2 Research Design............................................................................................................... 8 2.3 Research Methodology .................................................................................................. 10 2.4 Data Collection .............................................................................................................. 12 3 Literature Review .................................................................................................................. 15 3.1 Strategic Alignment of IT .............................................................................................. 15 3.2 Cloud Computing ........................................................................................................... 19 3.3 Service Models in Cloud Computing ............................................................................. 23 3.4 Software as a Service (SaaS) ......................................................................................... 28 3.4.1 History and Concept ............................................................................................... 28 3.4.2 SaaS Model ............................................................................................................. 29 3.4.3 Definitions of SaaS ................................................................................................. 32 3.5 Business-level advantages of SaaS ................................................................................ 33 3.6 Considerations for adopting SaaS .................................................................................. 37 4 Empirical Analysis and Findings .......................................................................................... 41 4.1 Strategic Benefits of SaaS .............................................................................................. 41 4.1.1 Differentiation through SaaS .................................................................................. 43 4.1.2 Innovation through SaaS ......................................................................................... 44 4.2 Findings from IBM Global SaaS Study ......................................................................... 45 4.3 Advantages of adopting SaaS applications .................................................................... 48 4.4 Key issues and considerations for SaaS adoption .......................................................... 50 4.4.1 Benefits and risks issues for SaaS customers ......................................................... 50 4.4.2 Considerations for SaaS adoption (The NIST Report) ........................................... 53 iv 4.4.3 Issues and concerns for SaaS adoption (The Correlsense Report) ......................... 54 5 Conclusions ........................................................................................................................... 58 5.1 Major findings and interpretations ................................................................................. 58 5.2 Limitations and future research ..................................................................................... 59 References ................................................................................................................................ 61 Appendix A: Query terms and phrases .................................................................................... 65 Appendix B: Databases used for integrated literature search .................................................. 66 Appendix C: Summary of integrative literature review ........................................................... 67 Appendix D: Companies mentioned ........................................................................................ 69 v List of Figures Figure 1 Inductive Vs. Deductive research approach ……..………...……………...…..7 Figure 2 Research design model …………………………………………………..........9 Figure 3 Strategic Alignment Model ……..…………………..………......……….......16 Figure 4 Four alignment perspectives …………………………………………………17 Figure 5 Cloud computing stack ...……………………………...……………………..24 Figure 6 Cloud model …...……………...……………………………………………..26 Figure 7 Separation of responsibilities ….…………………………………………….27 Figure 8 UCSB-IBM cloud computing ontology ...…………………………………...28 Figure 9 SaaS model ………………………………………..………………………....30 Figure 10 SaaS vendors providing services platform …………………………..………31 Figure 11 SaaS vendors providing full services …………………………………..……32 Figure 12 Bullish on SaaS ………………...……………………………..……………..34 Figure 13 Gartner’s Pace-Layered Application Strategy ………………………...……..41 Figure 14 Profiling SaaS Adopters …………………………………………..…………46 Figure 15 SaaS and Competitive Advantage ……………………………..…………….48 List of Tables Table 1 Strategic and organizational benefits, disadvantages and risks of SaaS ….…49 Table 2 Economic benefits, disadvantages and risks of SaaS ………………..............50 Table 3 Occurrence of the benefit issues for the customer in the articles reviewed ....52 Table 4 Occurrence of the risks issues for the customer in the articles reviewed ..…..52 SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 6 2 Research Approach, Design and Methodology In this chapter the research approach, design and methodology will be stated that should lead to answer previously mentioned research questions addressing the strategic benefits and considerations of SaaS model. This chapter intends to provide a guidance and structure for the research in terms of fact findings and documenting the outcomes of the study. 2.1 Research Approach In academic research, there are two predominant research approaches of reasoning towards the acquisition of new knowledge in academic research i.e. inductive and deductive. Inductive research shifts “from particular situations to make or infer broad general ideas or theories” (Neville 2007). Inductive approach begins by collecting relevant data for a chosen topic of interest from different sources. Collected data then be collated, analyzed and presented. Inductive research might lead the researcher to arrive at a new definition or it might not. Inductive research approach can be very lengthy however the result might be “in terms of arriving at a fresh way of looking at the subject” (Neville 2007). Deductive research shifts “from general ideas or theories to specific particular and situations” (Neville 2007). Deductive approach demands a clear theoretical positioning prior to data collecting. Collected data then be collated, analyzed and presented. Deductive research “offers researchers a relatively easy and systematic way of testing established ideas” (Neville 2007). Induction research usually describe as moving from the specific to the general, while deduction research begins with the general and ends with the specific (see Fig. 1). SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 7 Fig 1: Inductive Vs. Deductive research approach When considering whether to use inductive or deductive approach, it is important to envision the purpose of research and research methods which suited the best to answer specific research questions. This study follows the deductive research method which concern with the confirmation of specific research questions. The research begins with the general level of focus on the cloud computing service models. Then the analysis moves to the specific level of focus to SaaS model and its strategic benefits and considerations for the business organizations. Another consideration is to decide whether a qualitative or quantitative approach will be conducted. Quantitative methods are a group of research methods mainly focus on quantities such as scale, range and frequency. Measurable data gathered and analyzed using mathematical or statistical techniques in order to establish quantitative relationship among variables. Quantitative research tends to “quantify data and generalise results from a sample of the population of interest” (McDonald and Headlam 2009). Qualitative research methods involves examining and reflecting on the less tangible aspects of a research subject such as SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 8 values, attitudes and perceptions (Neville 2007). Qualitative methods generally associated with the evaluation of social dimensions and provide results that are usually rich and detailed, providing ideas and concepts to inform the research. Qualitative methods can provide the researcher how people feel and what they think. This study follows the exploratory qualitative research approach based on reviewing previous literature and secondary survey data. Exploratory research provides a better understanding of a situation but not designed to come up with final answers or decisions (Brown and Suter 2012). The purpose of exploratory qualitative research is to understand and report the phenomena of research interest. Exploratory research might involve literature search, depth interviews, focus groups or group analysis. Among them, literature search is the quickest and least costly way to conduct. Concerning time and financial constraints of collecting primary data, this study will be based on literature search. Integrated literature review methodology will be used for the literature search in this study and more details will be discussed in research methodology section. 2.2 Research Design Research design serves as an architectural blueprint which linking the design, data collection and analysis of a research project to the research questions (Bickman et al. 1997). Fig. 12 visualizes the research design model of this study based on the research process presented by Kothari (2004). SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 9 Fig 2: Research design model SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 10 Initial step of this study is to define the research problem which is a general statement of the issue raising the questions raised for investigation. Careful understanding of the research problem leads to the formulation of research questions in meaningful terms. After the formulation of research questions, all available literature are to be examined for literature review. Literature review involves conceptual literature which concerning concepts and theories, and empirical literature which consisting previous studies similar to the proposed research (Kothari 2004). Books, academic journals, conference proceedings, government reports, industry surveys and other published or unpublished bibliographies are being carefully study, abstract and index. Related literature being read to the fullest possible coverage of chosen research topic in order to develop working hypotheses. Theoretical framework of the research extracted based on this knowledge. Once the research problem formulated clearly, a research design will be prepared. Research design serves as a “conceptual structure within which the research would be conducted” (Kothari 2004). The purpose of the research design is to provide efficiency in collecting relevant evidence. After the research design phase, appropriate data will be collected and executed. Data collection methods will be considered based on the scope and objectives of the study. Collected data will be executed in a systematic manner and empirical analysis will then be able to conducted. Data analysis methods will depend on research paradigm. Finally, empirical evidences will be interpreted and findings will be reported in an analytical manner that generates knowledge and insight in order to answer the research questions. 2.3 Research Methodology Research methodology is the overall approach to systematically resolving the research problem and involves the issues a researcher needs to consider about. It is the philosophy or general principle which will guide the researcher through the research process. This study will be guided by the framework of integrative literature review methodology presented by Whittemore and Knafl (2005). An integrative literature review is “a form of research that reviews, critiques, and synthesizes representative literature on a topic in an integrated way such that new frameworks and perspectives on the topic are generated” (Torraco 2005). SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 11 Rocco and Plakhotnik (2009) argue that an integrative literature review would lead to an initial holistic conceptualization of the phenomenon as well as new understandings and reconceptualizations in a field. Integrative literature review enables the scholarly reviewer to evaluate the strength of the scientific evidence, identify gaps in current research, identify the need for future research, bridge between related areas of work, and identify central issues in an area (Russell 2005). Conducting integrative literature reviews requires “a description of the research design where search terms used to collect the literature as data, criteria for a piece’s inclusion or exclusion, and data analysis techniques are described” (Rocco and Plakhotnik 2009). Integrated literature review allows simultaneous inclusion of different kind of researches in order to have more complete understanding of a phenomenon of concern and also combines data from theoretical as well as empirical literature. Whittemore and Knafl (2005) presented a framework for integrative literature review process proceeding the stages of problem identification, literature search, data evaluation, data analysis and presentation. The problem identification is the initial stage of integrative literature review that involves a clear identification of research problem and the purpose of the review. Whittemore and Knafl (2005) argued that “a clear problem identification and review purpose are essential to provide focus and boundaries for the integrative review process”. The literature search stage applies a comprehensive search for an integrative review using at least two or three literature search strategies in order to identify the maximum number of eligible primary sources. Well-defined literature search strategies are crucial for enhancing the rigour of any type of review since incomplete and biased searches result in an incompetent data and the potential for inaccurate results (Cooper 1998, Whittemore and Knafl 2005). The data evaluation stage involves a meaningful evaluation of diverse primary sources which included both theoretical and empirical reports. The process neither includes nor excludes the reports, instead prioritizes the reports based on the rigor and relevance to the research of interest. In data analysis stage, the data from primary sources are extracted and categorized into a unified and integrated conclusion about the research problem. The last stage of the integrative literature review process is the presentation stage. Explicit details from primary sources and evidence are presented to “capture the depth and breadth of the topic and contribute to a new understanding of the phenomenon of concern” (Whittemore and Knafl 2005). SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 12 2.4 Data Collection Previously described in research methodology, this study intends to follow the exploratory qualitative research approach. Data collection will be based on the existing literature and secondary survey data in order to extract required information for the research. A qualitative analysis will be followed up to address the strategic benefits of SaaS as well as future considerations for successful adoption of SaaS in business organizations. Secondary analysis of survey data is “the extraction of knowledge on topics other than those which were the focus of the original survey” (Hyman 1972). Glass (1976) argue that “secondary analysis is the re-analysis of data for the purpose of answering the original research questions with better statistical techniques, or answering new research questions with old data”. Some of the information are in the form of statistical documents which contain information and others are in the form of public compilations. Secondary analysis can also define as ‘an empirical exercise carried out on data that has already been gathered or compiled in some way’ (Dale et al. 1988). In contrast to primary research, secondary analysis focus on analyzing previously collected survey or other data which is originally collected by other researchers, organizations or government bodies. Empirical analysis of secondary data will be conducted through collected data with research questions in mind. Collected secondary data will be reassembled in new ways in order to answer specific research questions. Use of secondary data saves time and money since the data already collected and ready to analyze. Researcher can focus on analysis of existing data instead of collecting the primary data from scratch thus avoid hurdles that are usually associated with primary data collection. Another advantage of using secondary data is the availability of high quality industry surveys. Data collection of industry surveys from professional services firms usually performed by professional researchers who specialize in certain areas and have several years of experience in surveying that particular area of research. Ease of availability of data combined with time saving and financial incentives makes industry surveys as a favorable source of data for this study. However, there are a couple of considerations in order to assure a high quality research. Kothari (2004) stated that the researcher must see certain characteristics such as reliability, suitability and adequacy of secondary data. Even though the data not primarily collected by the researcher, it is crucial to understand the data collection methods used in the primary instance. A thorough examination upon the source of original SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 13 research should be done and any reasons that may limit the usefulness of chosen data set should be aware of. Disadvantages of using secondary data include the poor validity, possibilities of subjective influence and lack of standardized format. Data collection methods should choose carefully as these factors detract from the accuracy and quality of research. With a careful consideration for the pros and cons of using primary and secondary data, this study will be based on the secondary data collected via exploratory literature search. Brown and Suter (2012) define literature search as: “A search of popular press (newspapers, magazines, etc.), trade literature, academic literature, or published statistics from research firms or governmental agencies for data or insight into the problem at hand.” Data collection for this study employs to four stages: ● Define the research subject in terms of keywords ● Identify information sources ● Search previously identified information sources using keywords ● Download and archive relevant information First stage of literature search is to define the research subject in terms of keywords. The purpose is to generate key terms or phrases which are both fully reflect the research subject and easy to enter into a database search engine. The research topic breaks down into concepts which are generally nouns rather than verbs or adjectives. And key components that make up the research topic as a whole are pulled out. On the second stage, available databases and resources are analyzed and suitable information sources are identified. Reliability of an information source is the most important criteria for identifying correct information sources for the specific research. After the information sources for the research SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 14 have been selected, the literature search process begins with databases using keywords, Boolean logic and limiters. Most databases provide a standard basic interface which allows to enter search terms and a variety of ways using Boolean operators. Once documents that might be useful for the research are located, they are downloaded and citations are also exported into bibliographic management software such as Endnote. After literature search, collected information will be combined or reorganized in new ways to address research questions. Findings of empirical analysis will be presented in the next chapter. SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 15 3 Literature Review This chapter intends to deliver the readers a message that Software as a Service (SaaS) model should be promoted and implemented from a strategic IT and business perspective. For this reason, existing literature related on the strategic IT management and economical impacts of SaaS model in business organizations are being reviewed. Reporting of the findings from literature review are expected to convince and provide justification for business organizations and managers to adopt SaaS as a more strategically favourable alternative for the traditional business-critical software systems. Ethnography for the literature review will be firstly introduced concept of strategic IT management. Then the conceptual background of cloud computing and SaaS model will be presented. 3.1 Strategic Alignment of IT Role of IT in business organizations has changed dramatically in recent decades. Management of IT evolved from a traditional back-office support to an active role which creates efficiency in business operations and even expanded its horizon to a more strategic role of creating new business opportunities. Aligning IT and business strategies has become a critical and challenging issue for business and IT managers in modern business environments. With rapid changes in business models and technology innovation, business enterprises as well as managers who are responsible for strategic decisions required to anticipate those changes in order to deliver the successful implementation of business strategy. Henderson and Venkatraman (1999) developed a model for conceptualizing and directing of strategic IT management. The “Strategic Alignment Model” defines four underlying domains as a fundamental of strategic choice in business organizations: business strategy, IT strategy, organizational infrastructure and processes, and IS infrastructure and processes. SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 22 Cloud service providers provide customers a possibility to manage and control computing capabilities to provisioning the data processing, storage and networking. Not consumers but cloud service providers control and manage underlying cloud infrastructure. Consumers can control operating systems, storage, and deployed applications. And four deployment models are: ● Private cloud Private cloud provisioned for an exclusive use of single organization involving multiple consumers. Cloud infrastructure own, manage and operate by the organization itself, third party cloud service providers or can be a combination of them, and can be exist on or off premises. ● Community cloud Community cloud provisioned for an exclusive use for the specific community of consumers from several organizations which are sharing the same interest. Cloud infrastructure own, manage and operate by one or more organizations in the community, third party cloud service providers or can be a combination of them, and can be exist on or off premises. ● Public cloud Public cloud provisioned for the open use of general public. Cloud infrastructure own, manage and operate by government, academic or business organization or can also be a combination of them, and exist on the premises of cloud service provider. ● Hybrid cloud SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 23 Hybrid cloud infrastructure is a combination of private, community or public cloud. Composition can be of two or more cloud infrastructures that remain distinct entities but bound to standardize or proprietary technology which allows portability of data and applications. (Mell and Grance 2011) As the purpose of this dissertation is to highlight the strategic benefits and limitations of SaaS service model in business organizations, we intend to exclude detail discussions about the characteristics and deployment models but focus on the service models of cloud computing more specifically SaaS. 3.3 Service Models in Cloud Computing Cloud computing services can be classified as three different models: ● Software as a Service (SaaS) ● Platform as a Service (PaaS) and ● Infrastructure as a Service (IaaS) These three models or layers accomplished by the end-user layer and covered the end-user perspectives of cloud computing services. Following diagram depicts the three different layers of service models in cloud computing. SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 24 Fig 5: Cloud computing stack As depicted in Fig 5, cloud computing stack provide services for infrastructure, platform and application layers which encapsulated to ultimately support the user layer. Software as a Service (SaaS) encapsulate the vertical stack of service propositions from the basic infrastructure layer (IaaS) to platform layer (PaaS) to application layer (SaaS). Each layer in cloud computing stack can be integrated to or disintegrated from peer layers. U.S. National Institute of Standards and Technology (NIST) defines the service models of cloud computing as follows. “Software as a Service (SaaS). The capability provided to the consumer is to use the provider’s applications running on a cloud infrastructure. The applications are accessible from various client devices through either a thin client interface, such as a web browser (e.g., web-based email), or a program interface. The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings. Platform as a Service (PaaS). The capability provided to the consumer is to deploy onto the cloud infrastructure consumer-created or acquired applications created using programming languages, libraries, services, and tools supported by the provider. The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, or storage, but has SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 25 control over the deployed applications and possibly configuration settings for the application-hosting environment. Infrastructure as a Service (IaaS). The capability provided to the consumer is to provision processing, storage, networks, and other fundamental computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications. The consumer does not manage or control the underlying cloud infrastructure but has control over operating systems, storage, and deployed applications; and possibly limited control of select networking components (e.g., host firewalls).” (Mell and Grance 2011) Cloud computing service models can be illustrated as follows. SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 26 Fig 6: Cloud model SaaS, PaaS and IaaS models deliver cloud computing capabilities to business enterprises depends on the business requirements of respective clients. Fig 7 presents different computing capabilities provided by SaaS, PaaS and IaaS compare to traditional on-premises SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 27 software applications as well as separation of responsibilities between cloud vendor and customer. Fig 7: Separation of responsibilities (Chou 2010) Another service model of cloud computing that worth discussion is UCSB-IBM cloud ontology developed by a collaboration of (University of California, Santa Barbara (UCSB) and IBM. UCSB-IBM cloud ontology presents a comparatively simple five layers model of cloud computing services delivered. Classification of the cloud computing service layers in this model drawn from the service composability principles of Service-Oriented Architecture (SOA). SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 28 Fig 8: UCSB-IBM cloud computing ontology (Youseff et al. 2011) As shown in Fig 8, UCSB-IBM cloud computing ontology composed of five interdependent and composite layers and there are three constituents within the cloud infrastructure layer. The ontology begins with a firmware or hardware layer as the foundation and leads to the delivery of cloud applications. Critical cloud computing service models Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS) as well as more seldom used cloud computing services such as Communication as a Service (CaaS) and Data as a Service (DaaS) are delivered throughout the ontology. In the following subtopics, we are going to discuss about the background literature of Software as a Service (SaaS) model and the strategic benefits and limitations of adopting and implementing this model in business organizations. 3.4 Software as a Service (SaaS) 3.4.1 History and Concept Concept of SaaS dated back in 1990s with application service providers (ASPs) tried to develop new models of renting software applications over the internet rather than traditional SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 29 model of selling on-premise applications. Traditionally, deploying business information systems are a major taking. It can cost significant amount of time and large sum of money for enterprises whether the size of the organization is small or large. Enterprises need to seek advice from IT consultants and also need to hire IT professionals to customize and integrate with the current systems and data of the organization. Requirements of time frame, budget and human resources for the deployments of business-critical software application impose significant risk for the business organizations. On-demand service delivery model of SaaS removes typical requirements related with traditional software delivery models. SaaS model gives the enterprises an alternative to access business-critical software applications built on a shared infrastructure over the internet by subscription. SaaS applications can be accessible anytime from any computer or any device with internet connection. SaaS became gradually popular in recent decade as it simplifies the software deployment process and reduces acquisition costs for business-critical software applications also known as business information systems. 3.4.2 SaaS Model Software as a Service (SaaS) is a distribution model of software applications that are hosted and delivered over the internet by the cloud computing service providers also known as cloud vendors and are available for the customers to access and run for. It is a web-based service and users typically access from a “thin client” through a web browser or a graphical user interface (GUI). SaaS allows companies to obtain business applications at a typically low cost compare to traditional licensed applications specifically business-critical software systems. As the application software is hosting remotely over the internet cloud, customers do not need to invest in physical hardware infrastructure and removes the need to install, setup and maintain software applications. SaaS model refers software as a service contrast to the traditional software distribution models in which software refer as a product and are purchased for and installed on “thick client” computers. SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 30 Fig 9: SaaS model “With the SaaS model, software applications are deployed on vendors’ premises prior to a client’s adoption. Clients do not purchase software or infrastructure (e.g. hardware and OS) upfront, but pay for their access to the services over time.” (Xin and Levina 2008) SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 31 Carraro and Chong (2006) categorized SaaS offers into “Line-of-business services” or “Consumer-oriented services” . “Line-of-business services” are the services offered to all sizes of business organizations and are very often large and customizable business information systems supporting the critical business processes such as sales, finances, customer relationship management, etc. “Line-of-business services” typically charge customers on a subscription-basis. “Consumer-oriented services” are the cloud computing services offered to general public. “Consumer-oriented services” can be sold to the customers on a subscription-basis but are very often delivered at no cost as the profit drawn from advertising. This study will be focused on business issues of line-of-business SaaS offerings i.e. strategic benefits and limitations of SaaS model around the context of the “lineof-business services”. Liao and Tao (2008) stated that “[...] the ownership of software shifts from the customer to SaaS providers; those responsibilities of technology infrastructure and management, and other areas (such as hardware and professional services) redistribute to the supplier”. They have also identified SaaS service modes in two different forms: ● Provide services platform Cloud service providers build SaaS platform to catalogue business applications where enterprises and independent software vendors (ISVs) can engaged in. SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 38 Major challenges for SaaS adoption can be boiled down into following considerations: ● Security and privacy considerations (Subashini and Kavitha 2010, Verma 2011, Avram 2013) ● Reliability and technical considerations (Godse and Mulik 2009, Carraro and Chong 2006, Verma 2011, Liao and Tao 2008) ● Financial considerations (Carraro and Chong 2006, Liao and Tao 2008, Verma 2011) and ● Legal considerations (Liao and Tao 2008, Verma 2011) Security and privacy considerations Since cloud computing service models are new trend, there is a great deal of uncertainty regarding security and privacy of data which makes it number one concern for the executives considering SaaS adoption. Majority of business organizations are still uncomfortable with SaaS model due to the obscurity about the way their data is stored and secured (Subashini and Kavitha 2010). Modern business organizations also facing numerous requirements and regulations to protect the privacy of the individual information of their clients. It is not clear that cloud computing models (including SaaS) can provide adequate protection of such information or whether business organizations found themselves breaching of some regulations unknowingly because of this new service model (Avram 2013). Reliability and technical considerations Godse and Mulik (2009) mentioned reliability as one of the factors to be considered for SaaS adoption. Reliability is the ability of a SaaS application to remain available for the users in real-time. Enterprise applications are vital for modern business organizations so that they must be reliable and available 24/7 in order to support business operations. As modern SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 39 business organizations compete globally in different geographic regions and time zones around the world, it is imperative to make sure that the business-critical information systems are up and running around the clock. Another factor to be considered in adopting SaaS is the “type and amount of data that will be transmitted to and from the application on a regular basis”(Carraro and Chong 2006). Speed of data transfer is also a factor that need to take account into consideration for SaaS applications. SaaS applications running on the internet cloud instead of local ethernet network so that the “problem to log onto the site due to the heavy traffic or unavailability of site and the firewall not permitting integration with back end systems are some of the common bottlenecks faced by SaaS users” (Verma 2011). Liao and Tao (2008) argue that enterprises should worry about corporate data especially financial data and customer information, private and commercial data network transmissions, malicious programs, unexpected natural disasters and other factors which cause the data lost and sabotage. Financial considerations A recent SaaS study by IBM (2014) highlighted how leading business organizations are leveraging SaaS deployments to unlock benefits such as reducing total cost of ownership (TCO). Even though cloud vendors advocating and promoting the low-cost bandwagon of SaaS, the broader picture is relatively murky. Carraro and Chong (2006) point out the factors such as the number of licensed users, the amount of custom configurations for deployment and integration with current systems and the requirements for data storage can affect the TCO of SaaS applications. Initial acquisition costs for SaaS applications are normally lower than that of traditional on-premise software applications however there is less certainty in terms of long-term cost structure. Legal considerations As SaaS applications host on the internet cloud, it is very likely that the cloud vendor is running application servers from different parts of the world. Regulatory and legal environments of vendor’s country can significantly vary from that of buyer’s country (Verma 2011). That might affect the application requirements hence limit the business performance SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 40 of buyer organization. Carraro and Chong (2006) claimed that technical and financial considerations can also involve legal ramifications such as whether the cloud vendors are able to meet the internal data security and data privacy requirements of the organizations in order to avoid legal exposure. Enterprises have legal obligations toward their customers and other parties therefore it is critical to ascertain that SaaS continue to support those obligations. SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 41 4 Empirical Analysis and Findings This chapter intends to present the empirical analysis and findings of the data collected in order to answer the research questions previously mentioned in Chapter 1. 4.1 Strategic Benefits of SaaS Strategic alignment of business and IT strategies are critical for achieving success in business. As previously discussed in literature review, IT strategy consists of IS and IT components. IS component defines the information systems requirements of an organization to support the overall business strategy. IT components define the vision of how information systems will be supported the strategic demands of an organization. IS and IT characteristics such as reliability, cost-performance levels and flexibility could attribute positively to business organizations to create new business strategies as well as support current business strategies (Henderson and Venkatraman 1993, Luftman 2000, Wilson 1989). A framework that might useful in this regard is Gartner’s Pace-Layered Application Strategy which allows organizations to map and classify existing IT competencies, and develop a roadmap to deliver greater business value (Swanton 2011). Fig 13: Gartner’s Pace-Layered Application Strategy (Gaughan 2014) SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 42 Liebmann (2012) explained Gartner’s Pace-Layered Application Strategy as follows: “Systems of Record support standard, foundational business processes such as payroll and general ledger. The goal with these systems is to ensure reliability while driving down costs, since they don't provide any real competitive advantage. Systems of Differentiation support non-standard business processes that are core to a company's operations, such as customer experience management and product development -- but provide that support in a way that is substantially better than its competitors in order to gain incremental advantages in the marketplace. Systems of Innovation support new, experimental business initiatives intended to disrupt markets and establish true sustainable market leadership.” Systems of record are necessary for the daily operation of business processes, however they cannot offer real strategic value. Over the past decades, systems of record have matured to the point where there is only a little strategic advantage to having own unique capability for an enterprise (Hinchcliffe 2011). Most firms would go out of business without the data within and automated capabilities of their systems of record, but systems of record are increasingly becoming commoditized by SaaS and the cloud (Hinchcliffe 2011). SaaS solutions enable enterprises “to develop new edge capabilities” and it “can provide innovative and business differentiating functions” (Desisto 2011). When exploring the strategic benefits of SaaS among enterprises, it is more compelling to focus on in considering whether SaaS support: ● Differentiation to advance competitors SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 43 ● Innovation to gain market leadership 4.1.1 Differentiation through SaaS Differentiation of enterprise applications presents the aspects of doing business activities differently from comparable firms as well as specifying the details of how different approach should be taken (Genovese 2012). Systems of differentiation enable for better product development as well as optimization of systems and processes. Systems of differentiation are the “[...] business applications supporting processes and related data that are unique to each business, where the know-how makes a big difference for businesses to succeed in capturing new customers and retaining existing ones.” (Sage 2011) Systems of differentiation are typically ERP developments which may comprise but not limited to the systems for customer service, R&D and product development processes. These systems traditionally deploy by on premises but some IT service providers started to deploy as SaaS applications in recent years. SaaS model offers enterprises a different way of implementing and managing the systems of differentiation which allows them to run business processes differently from competitors. One of the features of SaaS distinguishing it from traditional on-premises software packages is its deployment model. With SaaS model, clients do not purchase software or infrastructure upfront. Instead they pay for the access to the services overtime. Since applications are already deployed on the SaaS vendors’ sites, implementation cycle for enterprise applications is shortened (Xin and Levina 2008). That allows an enterprise to utilize business information systems in order to provide services to their customers and take response to fluid market conditions sooner than its competitors. So that they can acquire capabilities to do the business better than its competitors by providing faster services. SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 44 4.1.2 Innovation through SaaS “SaaS-delivered solutions can provide access to innovation without the pain of traditional upgrade programs.” (Desisto 2012) “Cloud computing can lower IT barriers to innovation” (Avram 2012). SaaS, which is the most adopted service delivery model of cloud computing solutions offer a way to develop new capabilities and provide innovative functions (Desisto 2011). Janssen and Joha (2011) stated that SaaS “enabling innovation as depreciation of existing software hindered the buying of new software.” According to Malladi and Krishnan (2012), SaaS adoption can support IT-enabled innovation of the enterprises. Menken (2009) compare the benefits of software innovation through SaaS compared to traditional software applications. SaaS allows enterprises to access latest software versions sooner than traditional software applications. With traditional on-premise software applications, enterprises have to wait for the latest version of software package and updates to be released by the software vendors. It is not efficient for software vendors to respond every single customer requirements arose and release a new version. Instead, they release the updates periodically and new version of the software over a certain period of time. With SaaS, cloud vendors can “immediately offer their updated software solutions to clients online in a cost-effective and efficient way” (Menken 2009). Software vendors nowadays are responsible for proactively managing their software solutions not only to react customer problems but also modifying the applications according to the ever-changing business requirements and requests of the customers. SaaS solutions enable capabilities to spend less business resources on creating new enterprise applications or modifying current applications in order to suit strategic requirements that are crucial to stay competitive in rapidly changing business environment. Hence enterprises could spend more time focused on business growth and innovation. Janssen and Joha (2011) argued that SaaS could provide benefits related to the “development of software which could result in potential cost-savings and better cost control.” Minney (2012) stated that SaaS solutions “enable multiple points of entry for different members of staff” so that “collaboration should be a breeze with the ability to define workflows and roles and deal with situations in real-time SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 45 without having to go outside the system to communicate via email, chat or phone.” This allows business organizations not only to outsource but also to crowdsource creative and innovative solutions for their products and services. In the following sections, secondary survey data and existing literature related to the SaaS model will be intensively reviewed and analyzed in order to explore how strategic benefits and advantages of adopting SaaS in business organizations as well as finding key issues that need to be considered. 4.2 Findings from IBM Global SaaS Study In 2014, IBM Center for Applied Insights published a global study of how SaaS is accelerating competitive differentiation and fueling powerful competitive advantage (IBM 2014). The study conducted to 879 decision makers in companies that have adopted SaaS. Respondents comprise 12 percent of C-level line-of-business executives, 10 percent of Clevel IT executives, and the remainder of Vice Presidents, directors and managers. Respondents split roughly evenly between business and IT functions. Twenty percent of respondents work in the companies of more than 10,000 employees and 40 percent are in the companies of more than 2,500 employees. In order to explore how SaaS helping enterprises gain competitive advantage more than simply reducing costs, the study segmented survey respondents into three groups (IBM 2014): ● “Pacesetters, who have the highest level of SaaS adoption and are gaining competitive advantage through their broad efforts” ● “Challengers, who have adopted SaaS more narrowly but are gaining competitive advantage through the SaaS deployments they do have” ● “Chasers, who have been slower to adopt SaaS and gain competitive advantage through its use” SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 46 Figure 14 illustrates the profiling of SaaS adopters among survey respondents. Horizontal axis represents the degree of agreement with a statement regarding achieving competitive advantage through SaaS. Vertical axis represents the numbers of application areas the company deploys as SaaS applications. Where the size of shaded bubbles shows the relative number of companies that fall at a specific deployment/competitive advantage intersection. Fig 14: Profiling SaaS Adopters (IBM 2014) Nineteen percent of the survey population are “Pacesetters” with the highest level of SaaS adoption and are gaining competitive advantages. “Pacesetters” motivated by the desire to use SaaS to pursue deeper collaboration, market agility and better decision making. On the other hand, “Challengers” and “Chasers” are lagging behind while they are primarily motivated by reducing total cost of ownership (TCO). SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 47 The study (IBM 2014) found that the enterprises who exhibit the highest level of SaaS adoption i.e. “Pacesetters” are gaining competitive advantage through their broad efforts. Majority of the “Pacesetters” reveal that SaaS helps them to unlock competitive advantage through deeper collaboration, market agility and better decision making. Deeper internal and external collaborations across the organizations and throughout ecosystems allow reduction in implementation time for projects. Sixty-one percent of “Pacesetters” say that SaaS boosts both internal and external collaborations. Market agility is another strategic benefit gained by adopting SaaS applications. Seventy-one percent of “Pacesetters” are employing SaaS to scale down their time to market and 68 percent use it to improve customer experience. It can be clearly seen that SaaS enables its top adopters to respond more effectively to dynamic challenges and fluid opportunities. SaaS also helps better decision making among top practitioners. Seventy-two percent of “Pacesetters” say that they use SaaS to leverage analytic and gain insights from large masses of data. SaaS enables “Pacesetters” to make faster and more precise decisions, and ultimately achieve competitive advantage by generating new insights from large data sets. SaaS can provide entire enterprise a wide range of strategic benefits, not merely cost reductions but also nourishing deeper internal and external collaborations, clearing the way for better decision making, and enabling enterprises more customer-focused and agile in the competitive markets (IBM 2014). Competitive advantages of SaaS among “Pacesetters”, “Challengers” and “Chasers” can be seen in Figure 15. SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 54 catastrophe protection of the data provided by the SaaS provider. And the data is available on demand to the enterprises that purchased SaaS, “providing greater convenience and reduced risk of data loss or theft”. According to the NIST, “this logical centralization of data has important implications for consumers”. ● Platform responsibilities managed by providers: With SaaS model, management of data infrastructure and operational issues for the enterprise applications are the responsibilities of the cloud service provider. Enterprises can avoid hassles for choosing the operating system, hardware devices, application configurations or software library versions underlie a SaaS application. All the system upgrades occur on the cloud provider side so that SaaS consumers can get the benefits of upgrades without any headaches. Enterprises are not required to maintain on premises IT support as the SaaS provider have an obligation to perform field services that guard against known exploits at the application level. ● Savings in up-front costs: SaaS applications allow enterprises to get started without any up-front costs for hardware acquisition and installation. Furthermore, SaaS providers tend to provision computing resources at scale and more efficiently than individual enterprises, which may reduce ongoing costs for the enterprises which assuming a competitive marketplace. 4.4.3 Issues and concerns for SaaS adoption (The Correlsense Report) Despite several strategic benefits of adopting SaaS model in business organizations, there are also critical issues and concerns around SaaS. Correlsense (2012) suggested key considerations enterprise customers need to take into account before moving ahead with new or expanded SaaS deployments: ● See the Big Picture: As new areas of IT being effected as SaaS deployments get larger, project managers required to set back and consider all organizational implications that bordered SaaS implementations. Following critical steps are SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 55 suggested to take in order to see the bigger picture of SaaS implementations in enterprises: ○ Defining project requirements ○ Aligning functionality with requirements ○ Addressing data security needs ○ Identifying and facilitating stakeholder buy in ○ Bridging functionality gaps with add-ons Management challenge for SaaS is two-fold: ○ To orchestrate the SaaS implementation to fully meet functional requirements of todays’ competitive marketplace ○ To handle change management and essentially making the project future-proof ● Plan Ahead for All Major Needs: Enterprises will need to be addressed new requirements that may not have been part of initial SaaS projects may not be covered by the core SaaS applications. IT and business teams should carefully consider specific requirements of their organization in the following areas to avoid project derailment: ○ Compliance - Enterprises need to comply with government regulations and mandates SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 56 ○ Business Intelligence - Enterprises need to identify, extract and analyze business data with third-party business intelligence tools if these tools are not supported by the standard functions of SaaS application ○ Security - Since data and other intellectual property assets are stored in the provider’s side in SaaS model, it is critical to meet security requirements for the functions such as cloud identity and access management. ○ Integration - Enterprises should understand their data and systems integration needs in advance to avoid problems. And they should carefully assess the capabilities of the SaaS provider in this area. ● Plan for Application Support: When SaaS users experiencing problems such as the application is running slowly or is unavailable, enterprises need to provide users with easy and straightforward directions to follow. Support teams require the tools that enable them to quickly and accurately identify the problems and take actions to remediate. ● Tools for Measuring Application Performance: IT and business teams of the enterprises need tools for measuring performance characteristics and can answer questions related to the end users. Additionally, they need “quickly accessible information for every single user, location and type of activity associated with the application”. ● Evaluating SLAs for SaaS: Service level agreements (SLAs) traditionally measured by system performance based on the uptime of the application. However, SLAs structured around uptime cannot guarantee the efficiency of SaaS applications. “Many customers have experienced situations in which the hosted application was up and running normally in the provider’s environment, but it was running slowly or not responding at all on the customer’s side”. Enterprises should pay more attention to response times rather than uptime in negotiating SLAs for SaaS deals. Enterprises SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 57 might want to assure that there are certain quality measurement tools to make a response time-based SLA actionable. ● Need for Unified Tools for SaaS and On-Premise Monitoring: Enterprises increasingly operate hybrid environments in which hosted and on-premise applications are running together (integrated or parallel). It is important to establish a common, unified view of application performance and response times in these hybrid environments. Ideal situation is to have a unified tool that enables monitoring, reporting and alerting on the performance of all applications, regardless of whether they are on-premise or hosted in the cloud. SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 58 5 Conclusions 5.1 Major findings and interpretations The purpose of this study is to provide a strategic view for SaaS adoption from the enterprise perspective and highlighting the competitive advantages of SaaS model over traditional onpremises applications. The study explore the strategic values and benefits as well as risks and considerations for adopting SaaS model in business organizations. Software as a Service (SaaS) increasingly drawing interest from the business organizations across the world. Enterprises of all sizes looking forward to create greater business value through SaaS model not merely in cost saving but for acquiring strategic advantages in order to position as a front runner in highly competitive modern business environment. Several SaaS providers claim that the broader usage of SaaS for business-critical applications across the organization allows the enterprises to increase speed, agility and potential cost savings as well as fostering growth, innovation and improve competitive advantage. However, business and IT executives need to take a strategic approach in order to realize the real potential of SaaS regardless of all optimism and promises from the SaaS providers who actively promoting SaaS bandwagon. SaaS helps business organizations to achieve competitive advantages beyond simply cost savings. SaaS model enables enterprises to gain competitive advantage by improving enterprise efficiency in deeper collaboration, better decision making and market agility. However, only the enterprises who have the highest level of SaaS adoption are gaining the most competitive advantages through SaaS. For the organizations who adopted SaaS more limitedly or slower to adopt SaaS, the strategic benefits of SaaS are less significant. The study also found that SaaS model have several advantages over traditional on-premises applications in terms of lower initial investments and costs, shorter implementation and configuration times, easier software version management, and possibility to access the software independently of location and time. All these factors provide optimal conditions for the competitive advantage of business organizations by providing potential cost savings, SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 59 increasing flexibility in working arrangements, improving customer service and streamlining business processes. However, more importantly, real competitive advantages came from creating differentiation and innovation through SaaS applications. The study found that SaaS enables business organizations to differentiate themselves from competitors and staying innovative. The findings of the study revealed that SaaS brings several benefits in the aspect of strategy execution, technology transformation, competitive potential and service level. Having said that SaaS delivers strategic benefits for the business organizations, however, there are several considerations and risks issues that should be taken into account before adopting SaaS model. Enterprises need to see the bigger picture of project, functionality and data security requirements as well as assess the management challenges to orchestrate SaaS implementation and to handle change management for future projects. It is crucial to address major requirements for legal compliances, business intelligence, security and integration issues before implementing SaaS applications. Enterprises should also prepare for the application support for end users. Since modern enterprises operate hybrid system environments, it is a priority to acquire suitable tools for measuring application performance of both SaaS and on-premise applications on a single, unified platform. One consideration that should taken into account is the evaluation of service level agreements (SLAs). Enterprises need to be assured that there are certain quality measurement tools to make a response time-based SLA actionable since SLAs structured around uptime cannot guarantee the efficiency of SaaS applications. 5.2 Limitations and future research Although the findings demonstrate strategic benefits, risk issues and considerations for SaaS model, there are several limitations for this study. Because of the limited time frame, this study couldn’t collect primary quantitative data and have to entirely rely on the secondary literature and survey data. First limitation is the insufficiency of resources which are explicitly addressing the strategic benefits of the SaaS model. Integrated literature review of this study found that the majority of the SaaS studies focus on technical issues. Even though there are some studies focus on economic benefits of SaaS model, those studies mainly conducted from the service provider point of view. Very few of SaaS studies are from the SaaS in Business: Exploring Strategic Benefits and Considerations of Software as a Service (SaaS) Model in Business Organizations 60 perspective of enterprise consumers. Furthermore, these studies focus on customer perception and bullish instead of the real strategic benefits of adopting SaaS model. An analysis for the real economic outcomes of adopting SaaS model in enterprises would be one of the possible future research interests. Second limitation is the limited availability of independent studies for the strategic issues of SaaS model. Despite several independent studies related to the technical issues of SaaS model, most of the studies for the economic benefits and strategic values of SaaS model conducted by cloud service providers themselves or IT consultancy firms. These studies may have biases towards the positive side of SaaS when choosing the samples and making generalizations. It is important to take necessary precautions to avoid imposing those biases while collecting and analyzing the secondary data. Thirdly, there are insufficient longitudinal studies regarding the long term effect of SaaS model on enterprises. 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