Buying software through a conventional licensing agreement can be expensive and restrictive but, as Jon Severn reports, a new generation of web-native software can be hosted remotely and accessed via a browser, with cost-effective payments made on a monthly per-user basis.

DOS, Windows and Apple Macintosh software applications used to be distributed on floppy discs then, as technology moved on, CD-Roms. Today, with broadband internet connections becoming commonplace, direct downloads are widely used. But in all three cases, the software is installed on a local computer or a server situated in the same building as the user(s).

Thanks to high-speed internet connections, however, users can now work with software that is hosted remotely and accessed via a web browser. Email is often accessed online in this way, and the word processing, spreadsheet and other applications offered by Google are popular, as they offer many of the same functions as the conventional software packages that are installed locally. This type of remotely hosted software application is known as software as a service (SaaS).

The general concept of remotely hosted software is not new; application service provider (ASP) software started to become popular at one stage, though this was essentially conventional software with a front-end added so it could be hosted by a third-party provider. While this offered some advantages for users, performance was often poor and software updates were no more frequent than conventional 'shrink-wrapped' software that is installed locally.

In contrast, today's generation of SaaS applications are written to be web-native so offer good performance and far better updates. For example, bug fixes and software upgrades can be implemented on a daily basis if necessary.

User benefits

From the user's point of view, there are a number of additional advantages. One of the most obvious is the pricing structure. Conventional software applications require a heavy investment at the outset and, depending on the application, ongoing payments for maintenance. Even packages such as office software, which do not require maintenance contracts, are not the 'buy once' product that they may appear; upgrades to operating systems, and the original software house's withdrawal of support, often mean that users have little option but to upgrade the software or reinvest in an alternative from another supplier. With SaaS, there is just a simple monthly fee to pay, often based on the number of users, but sometimes with additional charges for bandwidth or disk storage space, and maybe a set-up fee as well. Moreover, if a company does decide to switch suppliers, the logistics are easier and there is no large up-front investment required to buy a new set of software licenses (though retraining users will inevitably incur costs).

If the software is hosted remotely, the user's IT maintenance can be simplified significantly. Upgrades are easier to manage because they do not require any in-house effort, and it is very easy to add more users.

SaaS suppliers today usually implement a multi-tenant architecture in which a single instance of the software is used concurrently by multiple customers, but with customers' data kept separate. To avoid any one customer overwhelming the system, a load-balanced arrangement of multiple instances of the software can be implemented.