Explainer: Software as a Service (SaaS)

What is Software as a Service (SaaS)

When you purchase software, it comes on a CD-ROM or DVD, right? Though more likely these days, it is downloaded from the company website. Then your IT department installs it onto your computer. Or, with more advanced software that is multi-user and requires a database, it will be installed on a server. Eventually, obscured from our (the actual user) view, the software will need to be managed (should it stop working), maintained (in case of inevitable updates) and migrated (when a new server is due or when you get a new computer). But all of this is changing with Software as a Service (SaaS). This means not having to buy the software, but purchasing the right to use the software, based on a subscription contract.

Although there is a traditional case for having a physical product in hand, the benefits of a subscription model should not be dismissed. SaaS is already taking-off. We already see it across the e-landscape with Cloud services replacing those traditional work practices, and dramatically changing the tasks of the IT department in the process. Some products are already accepted across the business world; for example, Microsoft Office 365 or Google Suite, but also more specific packages like accounting (eg. SAGE), product design (eg. autoCAD), and communication services like Voice-over-Internet communications. And then there is Lighting Management software.

Photo by Madison Yocum on Unsplash

And yet, quite a few people in the lighting industry seem to struggle with the concept, despite the speed with which end-users are already embracing SaaS technology. So how do we explain the benefits of the new concept to our clients? Let’s have a look at a few of those benefits:

Key Benefits

  1. Instant availability

Unlike the traditional model, the SaaS application is already installed, configured and ready to use. The supplier takes care of setting it up and, generally, the user can expect the software to be ready for use within a couple of hours. Saas reduces the time and cost spent on installation and configuration, and also reduces the risk of errors that can occur in set-up.

  • Lower costs

A little bit counter-intuitive, but, generally speaking, the costs of SaaS are lower. Although the actual costs can be obscured in the overall cost of the IT department, conventional installation, server space and traditional software management does cost money.  And then there’s the cost of upgrades and new licenses.

SaaS subscriptions usually include automatic upgrades for new functionality included in the fee. Maintenance costs are lower as upgrades and ‘fixes’ will be shared by many users and executed by the experts of that particular piece of software.

And a major benefit for the SME business, SaaS allows smaller companies to use software that would normally only be realistically available for larger companies due to the high level of investment and cost of a license.

  • Scalability

SaaS solutions are offered via a Cloud environment, which makes them scalable. Starting small and growing the need for storage space will not require the user to buy another server or different software. The provider of the SaaS will have this responsibility. Furthermore, if integration is set-up for one user, it will usually also work for others, enabling the possibility to easily integrate with other SaaS products.

  • Upgrades and new functionality

SaaS implements upgrades of the software automatically and with this it becomes immediately available for the customers, removing the risk of working with out-of-date editions. Costs and effort associated with SaaS upgrades and new releases are lower than with traditional software. Upgrades are included in the subscription, where traditional software usually requires the user to buy (and install!) an upgrade package. And there is always the added cost risk of requiring a migration to new equipment.

Furthermore, any issues with the software, especially security related, will be patched and installed swiftly without the intervention by the IT department. This keeps the system and user secure. This is a factor that should never be underestimated, as we see more and more activity in the field of Cyber Security with hacking, phishing, malware, ransomware, etc).

  • Easy to use and flexible

SaaS software is easy to use, and in many cases works via a standard Internet web browser. Users can easily try out (new) functionality with minimal impact on operations. And with SaaS running in the Cloud, back-ups are automatically managed.

Furthermore, it keeps the user’s operations flexible (within reason!). It is easier to change to a new provider, especially when a migration is already undertaken by another user. However, it does not remove the thresholds completely, but in general it will be smaller than with traditional software. For lighting control systems, the migration is relatively straightforward as long as the control system offers an open interface for other users. Important point to check at the moment of initial purchase.

This makes the SaaS solution more robust for future customer needs as several suppliers will be able to offer solutions and this way keep the pressure on competition.

  • There for you

In general, SaaS solutions come with a Service Level Agreement (SLA) as part of the proposition. The software supplier is there for the client to make sure that operations run smoothly by resolving issues and continually facilitating the most efficient use of the application. Upgrades and new features are implemented to add more value to the system. With all this, the client recognises the added value of the Service in relation to the subscription fee.

And as an incentive, quick response times to customer requests will actually make Helpdesk Support operations run more smoothly.

Are there risks?

Is there also a downside?

What guarantees can SaaS providers give to their clients that they won’t go bust?

Is it just one of the gambles of doing business, or is there something clients can do to prevent this?

As ever, there is always a risk. But there are measures clients can put in place. It is always important to assess the risks. There are several things to consider:

At the hardware level it is often difficult to guarantee compatibility. There are standards and there are standards, but some are limited in functionality and may lag behind market developments.

Interoperability is not always guaranteed, as many have experienced with attempting to put different brands of components together into a single system. But we will see systems appear that confirm interoperability with other (named!) systems. This will reduce the risk provided the ‘interoperability’ claim doesn’t conceal that the ‘other’ systems are actually produced by the same company. Warning!

On a software level it gets easier. For example, TALQ (not an acronym!) is an initiative for interoperability in public street lighting. Most of these initiatives define the interface between the ‘system’ and the ‘software’. This allows a client to use different hardware systems and a common dashboard. However, in general, only limited functionality is standardised (again, the Standard is lagging at the moment), so the client is not always guaranteed all functionality of each system. Interoperability requires vigilance and understanding from the system designer.

Probably a better approach is to select a system where several suppliers provide an open interface to dashboard software. This way the client is also flexible to choose (and switch) who the supplier for the subscription is. This raises the issue of data ownership. The client needs to make sure that they owner the data, and that the gathered history can be transferred at a later date.

If clients want to go the next level (not unthinkable if the operation depends significantly on the software), then an Escrow Agreement is something to look at. An Escrow Agreement ensures that access/ownership to customer’s data is secured. This shows that the supplier has thought about business continuity in the unexpected event that the supplier is not able to guarantee the continuity of the application (for example, by bankruptcy or acquisition).

What to do?

SaaS clearly has advantages for the user. In many areas of business it is already well established. But, basically, a subscription model is simply a different way of paying for software, with added benefits. There are some risks, but the key issues are to make sure that contracts can be switched and that data is securely in the hands of the user/customer. SaaS ensures that, at all times, the customer can keep their options open.

Banner Photo by Markus Spiske on Unsplash

Main Photo by Madison Yocum on Unsplash

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About Jasper Hijink

ir. Jasper Hijink PdEng is a Consultant & owner of lux-it. He has a wide background in the lighting industry, both in the United Kingdom, Europe, Middle-East and Asia. He holds a Masters degree and a Professional Doctorate from Eindhoven University of Technology (the Netherlands) and worked in various roles for Philips Lighting and Holophane Europe ltd (part of Acuity Brands).

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