Defining SaaS in Africa

Johannesburg, 06 Aug 2009

The traditional definition of software-as-a-service (SaaS) is centrally hosted application software services accessed over the Internet. This definition, however, relies on the availability of the Internet and a lot of bandwidth, which is a major problem in SA.

So explained Rick Parry, national manager for Progress Software, at the ITWeb SaaS event held in Midrand, Johannesburg, this week.

Furthermore, argued Parry, the phrase 'software-as-a-service' does not include hardware, infrastructure and facilities. SA needs to move away from this paradigm and redefine what SaaS means in the local context, he suggested. Parry went on to clarify what SaaS is and isn't, and set out to provide a new definition for the emerging market.

SaaS is a business service offering a standards-driven application package. It is not a hosting or financing model, clarified Parry. SaaS is not just a CRM solution or an infrastructure solution. It is built on principles of value, risk and reward sharing and trust relationships; SaaS offers an alternative software licensing model.

“Therefore, SaaS should be defined as: a business service that delivers, maintains, and services application solutions. It can be installed anywhere, accessed by anyone with appropriate security permissions, by any means required by the customer and supported by the service provider either locally or remotely,” said Parry.

“The billing model should be defined in accordance with the value delivered, and must be tied to key performance indicators of the customer receiving the service,” he continued.

Local appeal

Parry explained that SaaS makes sense in the African market in that it addresses issues such as skills shortages and cost constraints. SaaS sidesteps the skills shortage issue as it is easy and quick to deploy. Also, the model is designed around providing ongoing service support.

SaaS is also a cost-effective solution, according to Parry. He noted there are no upfront costs - SaaS offers a quick go to market deployment with tangible benefits that can be linked to the value proposition.

Maxwell Ramutla, CEO of Afrovation, who also addressed Africa's readiness for SaaS at the event, explained that SaaS is succeeding despite the global recession. “Anything running successfully in a depressed economy will succeed in any economy,” he said.

Ramutla believes SA is ready for SaaS as the country boasts world-class data centre facilities. He said that the pay-as-you-go model would provide the tangible return on investment that local companies are looking for.