As software as a service (SaaS) permeates every corner of the user community, two companies, Verizon and Savvis, will announce later this year new services that extend the SaaS model well beyond application delivery.
Verizon is quietly leveraging its networking and datacentre capabilities in order to build and launch a platform it is calling "computing as a service," or CaaS. The CaaS offering for SaaS providers and large enterprises is targeted for release sometime in the fourth quarter.
Components of the service include the Verizon network (one of the largest in the world), storage, computing hardware, and IT management offered in the on-demand model.
Although CaaS may look a lot like the old utility computing model, it is in fact different, according to Jeff Kaplan, managing director for ThinkStrategies and founder of the SaaS Showplace.
"Verizon and companies like them are not being asked to just provide the hardware and the bandwidth; now they are going to help add SaaS development skills, provisioning capabilities, security, possibly even billing capabilities," said Kaplan.
Kaplan also said he foresees the day when CaaS providers become a channel to the market as resellers or, at the least, the distribution arm for a SaaS provider.
Although Verizon has not made the fee structure public yet, Christopher Gesell, director of product marketing for IT solutions, said Verizon will offer a fixed-price model based on the amount of infrastructure that is required to support a business.
"This will not be priced on transactions," said Gesell.
One Verizon customer, Plateau, a provider of a suite of HR talent management applications offered in the SaaS model, said CaaS would give Plateau a more cost-effective way to manage usage spikes during the year.
"During appraisal time at a company, for example, thousands of employees might be hitting the infrastructure at the same time," said Shelly Heiden, executive vice president of global operations for Plateau.
Savvis, a company that offers on-demand infrastructure for on-demand applications, is taking the on-demand model in yet another direction.
Savvis will launch later this year a service it calls "Virtual Intelligent Hosting." Stephen Ward, director of market development, says it will be used for "temporary computing." Temporary computing will be targeted at application developers using the SaaS model as well as for companies such as those in the biotech industry that may need to crunch test result numbers.
In either case, users have very short-duration infrastructure needs. In the case of SaaS, additional infrastructure would be needed for a company to test the service before it goes live. In regard to biotech companies looking for results against huge amounts of data, that, too, would be for short-term usage.
"What companies are looking for today is flexibility in the infrastructure," said Ward.
The ability to provision SaaS companies with infrastructure on an as-needed basis may also spur even faster growth of the SaaS model.
Up until now one of the major advantages an on-premise startup had over a SaaS startup was the fact that on-premise companies do not necessarily require a large expenditure for infrastructure to sell product. A finished package, good IP, and a savvy marketer were almost all that was required.
On the other hand, SaaS requires a huge infrastructure to provide the service from day one. Computing as a service relieves SaaS providers of the burden to fund an expensive infrastructure before they have a single subscriber.
Kaplan says every industry in one way or another is adopting some form of SaaS. As a result, service providers, including ISPs, are now being asked what their SaaS strategy is. ISVs and SaaS providers are in turn looking for providers such as Verizon.
"CIOs are gaining the religion. They don't see it as a threat to their livelihood anymore. It just makes their job easier and allows IT to play a more important role in the business," said Kaplan.