Real Estate Technology expert and Lucernex President, Joe Valeri (see Joe’s management summary here), discusses ASP, SaaS and Cloud Computing for real estate solutions.
When Lucernex started in 2000 we were the first store lifecycle management (SLM) solution to deliver our entire application as 100% Web-based, delivered as an Application Service Provider (ASP) solution. In reality we did not know it at the time but we were actually a Software as a Service (SaaS) vendor even then (according to Wikipedia it was coined in a February 2001 article written by the Software & Information Industry’s (SIIA) eBusiness Division). The difference to end users is largely invisible (except in the lower price) but to a software vendor the difference drives flexibility, costs (hence price to end-user) and focus. The next step is “Cloud Computing”, a buzz word for a service that provides equipment to host applications while doing all of the IT management on a secure environment optimized for performance and scalability.
Since this is not an article on the differences between ASP, SaaS and Cloud Computing in general, I will summarize very briefly below and refer the reader to Demystifying SaaS vs Cloud for a more complete discussion. In truth there are hundreds of these articles and even they don’t all agree.
Application Service Provider (ASP) – Web-based, hosted version of an application. Separate databases and servers for each client. ASP is much like the old model of selling software where the application was put behind a client’s firewall but instead, with ASP, the application is moved inside someone else’s firewall.
Software as a Service (SaaS) – multi-tenant databases and shared architecture. The vendor typically owns the hardware. SaaS can be delivered in a vendor’s data center, a collocation center or a true cloud computing environment.
Cloud Computing – Software applications that are delivered in a Cloud Computing center which take advantage of new technologies like virtualization and SAN storage to deliver optimal bandwidth, response times, storage and IT management. These centers typically use massive enterprise hardware owned and serviced by the Cloud center. The software vendor simply leases space in the “Cloud” and sells access to clients.
In the context of an IWMS solution, what is the difference between “ASP”, “SaaS” and “Cloud” and what are the Pro’s and Con’s of each one?
An application delivered in a browser that is running on hardware dedicated to one client and hosted by the vendor somewhere.
1. Control – For user companies that believe that having the software on servers dedicated to them makes it more secure (which is a fallacy in this writer’s opinion) and more “their own” ASP or even self-hosting is for you.
2. Freedom of customization – If money is no object and you want to take an application and customize it to do what you want it to do and not work with the vendor to increase specific functionality in the core product over time, ASP is the best way to do that. Did I mention it will cost you A LOT more once you customize?
1. Expense – Having dedicated equipment is by its very nature expensive and you will never come any where near utilizing its full capacity. You will need to pay IT people to maintain servers just for you without any cost being shared across identically configured servers serving an identical purpose.
2. Upgrades – Having the application on servers dedicated to you is the same as if you had them inside you own firewall. If you want to upgrade, the project of upgrading will cost you. If you make even one small customization that means the upgrade will need to be custom built for you. Again, this equals a much higher cost.
3. Performance – Technology advances quickly. Even if you depreciate your servers over 3 years and replace them immediately upon full depreciation, you will never be able to keep up with advances in technology that increase performance and trying will cost you a lot of money.
4. Security – Sorry to all those IT departments out there that sell the value of in-house hosting or ASP’s on the basis of security but no one can secure data better than a facility that is in the business of securing data.
An application delivered in a browser that is run on 100% shared equipment and hosted by the vendor in their data center or in a collocation facility on specific servers owned or leased by the vendor. The software vendor typically maintains all equipment and software.
1. Lower cost – Cheaper than ASP as shared equipment means users share the cost of the equipment, bandwidth and IT resources for maintenance.
2. Stability – When a vendor has ALL of its customers on a cluster of servers you can bet they will do everything in their power to keep that environment stable.
3. Upgrades – Upgrades are free and fast. When the vendor applies upgrades all users get them. The only exception is for users that add customizations into a SaaS environment which may require additional cost as the vendor will have to uniquely test the user’s environment for every upgrade.
4. Security – More secure than ASP if hosted in a collocation facility.
5. Focus – SaaS, when compared to ASP, allows the software vendor to focus more on software development and less on IT and client by client differences in code.
1. Performance – For much the same reason that client IT departments can’t keep up with new technologies that improve performance, SaaS providers can’t either. Since the software vendor owns the hardware or leases it and maintains all hardware, switching to newer, higher performing software can be tough. A properly architected vendor data center can largely overcome this with virtualization and other newer technologies.
2. Security – No more secure than a client in-house hosting if inside the vendors own data center. In fact, for smaller vendors it may be less secure than in-house client hosting. Hosting a SaaS solution in a collocation facility is far safer.
3. Scalability – Again, if properly architected, a SaaS provider can be very scalable however it is still not going to happen as fast as it can in a Cloud center.
An application delivered in a browser that is run on 100% shared equipment and hosted at a Cloud computing center on massive enterprise servers owned by the Cloud provider. The Cloud centers utilize virtualization to ensure fast response times and no downtime of application servers and use SAN’s to ensure database scalability and speed. The Cloud provider manages and maintains all equipment and software.
1. Expense – By removing all of the IT service cost from the SLM or IWMS vendor as well as the hardware cost associated with ASP and SaaS, the SLM or IWMS vendor can offer much cheaper prices to end users. The total cost of ownership to the end user will be lowest with a Cloud offering.
2. Performance – Cloud centers are going to employ any proven new technology that improves performance and all customers of the Cloud center will benefit.
3. Scalability – By its very nature a Cloud center is all about scalability. As long as the vendor system architecture support virtualization of the front end and real time redundancy on the back end, use of a Cloud center will mean almost immediate scalability.
4. Security – A Cloud centers business is protecting data. They have the best people and tools to ensure data security.
5. Focus – Cloud, when compared to SaaS or ASP, allows the software vendor to focus completely on software development and not on IT or custom coding. This means more functionality and much quicker turnaround on feature requests.
6. Customer Service – Software delivered in the Cloud is more consistent than ASP and higher performing than SaaS. The vendor can more easily and quickly solve problems and fix defects.
1. Ability to customize – Most vendors who deploy into a Cloud center won’t allow customization unless the client pays a high fee to maintain and manage that customization. Newer offerings like “Custom Cloud” from Salesforce are built specifically to allow end user custom environments – but again, at a much higher price than the shared solution.
SaaS applications like Salesforce.com have become very common and popular. The same is happening, albeit more slowly, for more traditionally behind the firewall applications like SAP, or desktop applications like Microsoft Word, both of which are now offered as a service. In the SLM and IWMS industries, applications have been ASP or SaaS for several years. The same can be said for the Property Management market, read
Property Management Software Sure Is SaaSy by Chris Thorman on his SoftwareAdvice blog.
Cloud computing is now here and can further advance the savings while promoting product development and customer service by SLM and IWMS vendors.
Lx Retail has been a SaaS solution since before the term was coined though it was also sold as an ASP solution to some clients. We recently moved into a Cloud Computing center and can now offer Lx Retail in the Cloud. As we are the low cost provider of enterprise real estate solutions and have had to manage some of the largest data sets from the largest retailers over the years, we decided it was time to further optimize our application and launch it in the “Cloud”. As a result we have seen dramatic performance improvements and our scalability is nearly infinite.