Hosting an application in the cloud doesn't necessarily make it software as a service (SAAS). Add this bit of confusion to a market already filled with hype and jargon and it gets even more difficult to decipher exactly what it is you're buying. But don't despair. The following are five tests you can use to help determine if the application you're evaluating for your business is really SAAS or just a hosted version of a conventional software product.
Test No. 1: Multitenancy
This is the big one. In a true SAAS model, there is only one copy of the application (single instance) which all customers use (multitenant) and can customize to meet their unique requirements. Contrasted with a hosting model in which, yes, the application is "in the cloud" but every customer has their own copy of the application (multi-instance, single tenant). This is effectively the same as the application service provider (ASP) hosting model of the late 1990s. Even if your vendor is using "virtualization" technology, it's not multitenant and therefore not SAAS.
The basic difference is that instead of maintaining only one version of a SAAS application for all customers, vendors who host need to maintain a version of their application for every customer. This is one of the major reasons why SAAS can be delivered so much more economically than conventional software products. So dig in and ask questions.
For example, ask how many versions of the application the vendor supports (answer should be one). Ask if you can choose not to upgrade (answer should be NO; although, you should be able to turn off certain features you don't wish to deploy). Or simply ask how many code bases the vendor is maintaining (again, answer should be one).
Test No. 2: Self-service
Self-service capabilities are a hallmark of SAAS applications. Since there is truly no software or appliances to be installed and configured (either physically or virtually), all interaction with the application can happen in real time directly from a Web browser. Generally speaking, SAAS companies tend to operate like Internet-based consumer companies. Visit the vendor's Web site to see how much of your "shopping" experience you can complete online.
For example, does the vendor offer a free trial? Can you make a purchase without involving the vendor's sales personnel? Provisioning trial and production accounts on demand is a relatively trivial matter for a SAAS vendor and is easily automated. On the other hand, attempting to offer trials for conventional software products can become another scaling and maintenance challenge for the vendor-even if that software is "virtualized." Vendor costs will escalate and that cost will ultimately be reflected in its pricing. If at any step you get a message to "fill out this form and a salesperson will be in touch," there's a good chance you're not dealing with a SAAS offering.