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SaaS – Infrastructure Efficiencies

Posted by terrosatechnologies on December 5, 2008

This Thinking about SaaS focuses on how infrastructure savings are derived from the efficiencies gained through the SaaS delivery model, which in turn drive down the total cost of using software.


It is clear that Software as a Service is a “Disruptive Technology”, shifting infrastructure and its operation from end user companies to centralized datacenters run by platform providers.


Substituting an individual company’s internal infrastructure with a SaaS based solution should be easy to quantify. Calculating internal amortized hardware/software acquisition costs + operating costs vs. Saas subscription fees gives an organization a clear picture on the financial justification.


But there is a broader argument that SaaS delivered solutions have such an efficiency advantage when compared to onsite solutions, consuming software any other way cannot be justified on cost alone. As SaaS becomes a larger percentage of the software market, the financial advantages become even more pronounced.


Take a traditional site installed application that has a web interface and a database. This application requires a minimum of 3 servers to run – 1 database server, 1 application server and 1 web server. This scenario has no clustering of servers for redundancy, offsite disaster recovery or other reliability measures, but is simply the minimum configuration.


Over time, the software provider sells their software package through traditional channels to 800 customers. Each of these customers purchase, install and maintain 3 servers for a total of 2400 servers across the entire customer base.


Each customer also consumes about ¼ of a person a year to maintain the environment, apply patches, and to install new releases of the application every 6 months. This totals 200 FTE resources employed to support the software package across the entire customer base of the software provider.


Now take the same software package, but the software provider sells their product as a service to the same based of 800 companies. They build two highly redundant, high capacity installations, in high security data centers, in two different states. This takes approximately 50 servers per location, storage area networks, data replication tools, etc.


They also need highly qualified operations personnel to run 24/7. 1 Director, 3 Managers (1 each shift), 5 DBAs, 2 network engineers, 3 server engineers, and 6 first line help desk people. This totals 20 people to operate the system.


So let’s recap:


2400 servers for site installed, 100 servers needed for the SaaS scenario

200 people needed for site installed, 20 people needed for the SaaS scenario


Also, note that the SaaS scenario has full redundancy both within a site and across sites in two different states, with live staff 24/7.


Similar figures apply to power, air, floor space and other datacenter requirements.

So, the case for SaaS is obvious from a ‘Green’ perspective, as well.


This big picture view clearly shows how the efficiencies of SaaS application delivery will drive down the cost of IT infrastructure for everyone as more adoption occurs and technology costs are spread across multiple organizations.




This “Thinking About SaaS” article is one in a series produced by Terrosa Technologies’ President, Kim A. Terry. Each article addresses a different knowledge area of applications delivered via the SaaS subscription model.



 About Terrosa:

Terrosa Technologies was born out of the recognition that software provided as a service produces greater efficiency, value and benefits over traditional site installed solutions. Enabled by a fast reliable Internet and the ever increasing sophistication of Saas offerings, many companies will be able to reduce their cost of operations and afford to do more with less. In uncertain and financially challenging times, it is more important than ever that Terrosa is helping our customers deliver products and services more efficiently and with less risk.


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