Ask the expert.

With Time Passios, Director of Product Management, Interactive Intelligence

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Q: We're hearing more about software as a service (SaaS) lately, and see it as a good option for our company. But we're curious: What's the difference between a SaaS provider and an application service provider (ASP), and what should we be aware of in selecting a SaaS vendor?

A: A little history to begin with. The concept of software as a service--applications developed and delivered by a hosted provider, as opposed to licensed, on-premise software solutions--essentially took shape in the late 1990s when some of the first "SaaS" firms were launched. But it wasn't until 2005 that SaaS became a truly recognized business solution, not coincidentally about the same time Microsoft put the "coming services wave" of SaaS at the top of its priorities list. Since then, SaaS ecosystems have continued to emerge, and hosted SaaS offerings have become an attractive option on the business communications landscape.

As for the "difference" between application service providers and SaaS providers, there's a core difference in the fact that most ASPs don't own the product/intellectual property they're hosting. They typically license it from the developer. A SaaS provider, on the other hand, is often the developer, which leaves them in a better position to respond to customer requests for software enhancements and customization.

From ASP To SaaS

Technology-wise, the ASP-to-SaaS shift comes down to how application services are developed and delivered. In the old ASP environment, providers offered a set menu of traditional client-server applications, usually hosted by third-party vendors who only managed servers and who extended little or no application development capability to enhance the applications being offered. (HTML front-ends were added almost as an afterthought.) Worse, ASP application performance was generally poor, since the apps weren't written as net-native ones, and updates were often no better.

By comparison, vendors utilizing the SaaS application delivery model develop and host Web-native applications specific to their customers, who easily access them via the Internet and pay only for using them, not owning them. And unlike ASP-based applications, net-native SaaS applications, or at least independent portions of them, are updated regularly.

Also, according to analysts at IDC, SaaS offerings include centralized feature updating that averts the need for downloadable patches and upgrades, along with pricing on a per-user basis, sometimes with a relatively small minimum number of users.

Which SaaS Vendor To Choose?

Of course no one knows your enterprise or contact center requirements (or both?) better than you. So put those at the top of your list when looking at SaaS vendors--but also keep in mind these key aspects of SaaS technologies:

Standardized applications. E-mail, accounting packages, CRM packages, audio and video conferencing, notifications, calendaring over the Web, etc. Take an inventory of everything a SaaS provider offers, including what can be developed if not already offered.

Advanced applications. These let you take another step, say for a contact center, and can range from ACD and IVR to outbound predictive dialing, quality monitoring, multimedia recording, disaster recovery, workforce management, e-mail response management, etc.

Parametric applications. Make sure your SaaS provider can customize new Web-based applications within a basic set of functions, in turn allowing your organization to create different kinds of business logic when needed--atop a common platform.

Application development. Two questions to ask: What is the level of engineering experience and expertise the SaaS provider offers? And is the development rapid?

Security. A data site should be sufficiently secure and transparent at the same time. One designated by the U.S. Department of Homeland Security and SAS-70 certified is even better, especially when SSL makes it less complex to access your applications.

Enablement technology. Some SaaS companies are still "in the process" of engineering enablement tools. But others are already using innovations like all-in-one platforms and software suites that let them offer virtually unlimited customization. Follow the innovators.

SIP, VoIP and network bandwidth. IP technologies have improved network quality of service (QoS) dramatically. Be sure you can access SaaS applications with low latencies and acceptable speeds.

Shift from an SaaS to an on-premise solution. It seems counter to the whole idea of SaaS reducing costs and administration headaches, but at some point, your business just might decide to purchase the software you've been using. Make sure a SaaS provider gives you that option if it's in your long-term communications plan.

As Eric Knorr wrote in his March 20, 2006 column on InfoWorld.com ("Software As A Service: The Next Big Thing"), "Some IT managers see SaaS as a godsend, with time-to-market and low maintenance core to the appeal."

He's right.

Tim Passios has more than 16 years' experience in the contact center industry and is the Director of Product Management for Interactive Intelligence, Inc., a leading provider of business communications software for the contact center and enterprise with over 2,500 installations in more than 60 countries. For more information, contact [e-mail] or 317-872-3000.