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How to save money with cloud applications?

  • A specialized software provider can target global markets: A company that made software for human resource management at boutique hotels might once have had a hard time finding enough of a market to sell its applications. But a hosted application can instantly reach the entire market, making specialization within a vertical not only possible, but preferable. This in turn means that SaaS providers can often deliver products that meet their markets’ needs more closely than traditional “shrinkwrap” vendors could.
  • Web systems are reliable enough: Despite sporadic outages and slow-downs, most people are willing to use the public Internet, the Hypertext Transfer Protocol and the TCP/IP stack to deliver business functions to end users.
  • Security is sufficiently well trusted and transparent: With the broad adoption of SSL, organizations have a way of reaching their applications without the complexity and burden of end-user configurations or VPNs.
  • Availability of enablement technology: According to IDC, organizations developing enablement technology that allow other vendors to quickly build SaaS applications will be important in driving adoption. Because of SaaS' relative infancy, many companies have either built enablement tools or platforms or are in the process of engineering enablement tools or platforms. A Saugatuck study shows that the industry will most likely converge to three or four enablers that will act as SaaS Integration Platforms (SIPs).
  • Wide Area Network's bandwidth has grown drastically following Moore's Law (more than 100% increase each 24 months) and is about to reach slow local networks bandwidths. Added to network quality of service improvement this has driven people and companies to trustfully access remote locations and applications with low latencies and acceptable speeds.
  • Save Money with Cloud Software

    The traditional rationale for outsourcing of IT systems is that by applying economies of scale to the operation of applications, a service provider can offer better, cheaper, more reliable applications than companies can themselves. The use of SaaS-based applications has grown dramatically, as reported by many of the analyst firms that cover the sector. But it’s only in recent years that SaaS has truly flourished. Several important changes to the way we work have made this rapid acceptance possible.
    • Everyone has a computer: Most information workers have access to a computer and are familiar with conventions from mouse usage to web interfaces. As a result, the learning curve for new, external applications is lower and less hand-holding by internal IT is needed.
    • Computing itself is a commodity: In the past, corporate mainframes were jealously guarded as strategic advantages. More recently, the applications were viewed as strategic. Today, people know it’s the business processes and the data itself—customer records, workflows, and pricing information—that matters. Computing and application licenses are cost centers, and as such, they’re suitable for cost reduction and outsourcing. The adoption of SaaS could also drive Internet-scale to become a commodity.
    • Insourcing IT systems requires expensive overhead including salaries, health care, liability and physical building space.
    • Applications are standardized: With some notable, industry-specific exceptions, most people spend most of their time using standardized applications. An expense reporting page, an applicant screening tool, a spreadsheet, or an e-mail system are all sufficiently ubiquitous and well understood that most users can switch from one system to another easily. This is evident from the number of web-based calendaring, spreadsheet, and e-mail systems that have emerged in recent years.
    • Parametric applications are usable: In older applications, the only way to change a workflow was to modify the code. But in more recent applications, particularly web-based ones, significantly new applications can be created from parameters and macros. This allows organizations to create many different kinds of business logic atop a common application platform. Many SaaS providers allow a wide range of customization within a basic set of functions.

    Cloud Software Hosting Alternatives

    According to Microsoft, cloud architectures generally can be classified as belonging to one of four "maturity levels," whose key attributes are configurability, multi-tenant efficiency, and scalability. Each level is distinguished from the previous one by the addition of one of those three attributes:
    • Level 1 - Ad-Hoc/Custom: At the first level of maturity, each customer has its own customized version of the hosted application and runs its own instance of the application on the host's servers. Migrating a traditional non-networked or client-server application to this level of SaaS typically requires the least development effort and reduces operating costs by consolidating server hardware and administration.
    • Level 2 - Configurable: The second maturity level provides greater program flexibility through configurable metadata, so that many customers can use separate instances of the same application code. This allows the vendor to meet the different needs of each customer through detailed configuration options, while simplifying maintenance and updating of a common code base.
    • Level 3 - Configurable, Multi-Tenant-Efficient: The third maturity level adds multi-tenancy to the second level, so that a single program instance serves all customers. This approach enables more efficient use of server resources without any apparent difference to the end user, but ultimately is limited in its scalability.
    • Level 4 - Scalable, Configurable, Multi-Tenant-Efficient: At the fourth and final SaaS maturity level, scalability is added through a multitier architecture supporting a load-balanced farm of identical application instances, running on a variable number of servers. The system's capacity can be increased or decreased to match demand by adding or removing servers, without the need for any further alteration of application software architecture.

    Virtualization also may be used in SaaS architectures, either in addition to multi-tenancy, or in place of it. One of the principal benefits of virtualization is that it can increase the system's capacity without additional programming. On the other hand, a considerable amount of programming may be required to construct a more efficient, multi-tenant application. Combining multi-tenancy and virtualization provides still greater flexibility to tune the system for optimal performance. In addition to full operating system-level virtualization, other virtualization techniques applied to SaaS include application virtualization and virtual appliances.

    Various types of software components and frameworks may be employed in the development of SaaS applications. These tools can reduce the time to market and cost of converting a traditional on-premise software product or building and deploying a new SaaS solution. Examples include components for subscription management, grid computing software, web application frameworks, and complete SaaS platform products.

    Cloud Software Key Characteristics

    The key characteristics of cloud software, according to IDC, include:
    • network-based access to, and management of, commercially available software
    • activities that are managed from central locations rather than at each customer's site, enabling customers to access applications remotely via the Web
    • application delivery that typically is closer to a one-to-many model (single instance, multi-tenant architecture) than to a one-to-one model, including architecture, pricing, partnering, and management characteristics
    • centralized feature updating, which obviates the need for downloadable patches and upgrades.
    • Cloud is often used in a larger network of communicating software - either as part of a mashup or as a plugin to a platform as a service. Service oriented architecture is naturally more complex than traditional models of software deployment.

    Cloud applications are generally priced on a per-user basis, sometimes with a relatively small minimum number of users and often with additional fees for extra bandwidth and storage. Cloud revenue streams to the vendor are therefore lower initially than traditional software license fees, but are also recurring, and therefore viewed as more predictable, much like maintenance fees for licensed software.

    In addition to the characteristics mentioned above, Cloud software turns the tragedy of the commons on its head and frequently has these additional benefits:

    • More feature requests from users since there is frequently no marginal cost for requesting new features;
    • Faster releases of new features since the entire community of users benefits from new functionality; and
    • The embodiment of recognized best practices since the community of users drives the software publisher to support the best practice.

    What is the History of Cloud Software?

    History

    The concept of "software as a service" started to circulate prior to 1999 and was considered to be "gaining acceptance in the marketplace" in Bennett et al., 1999 paper on "Service Based Software".

    Whilst the term "software as a service" was in common use, the CamelCase acronym "SaaS" was allegedly not coined until several years later in a white paper called "Strategic Backgrounder: Software as a Service" by the Software & Information Industry's eBusiness Division published in Feb. 2001, but written in fall of 2000 according to internal Association records.

    Philosophy

    As a term, SaaS is generally associated with business software and is typically thought of as a low-cost way for businesses to obtain the same benefits of commercially licensed, internally operated software without the associated complexity and high initial cost. Many types of software are well suited to the SaaS model, where customers may have little interest or capability in software deployment, but do have substantial computing needs. Application areas such as Customer relationship management (CRM), video conferencing, human resources, IT service management, accounting, IT security, web analytics, web content management and e-mail are some of the initial markets showing SaaS success. The distinction between SaaS and earlier applications delivered over the Internet is that SaaS solutions were developed specifically to leverage web technologies such as the browser, thereby making them web-native. The data design and architecture of SaaS applications are specifically built with a 'multi-tenant' backend, thus enabling multiple customers or users to access a shared data model. This further differentiates SaaS from client/server or 'ASP' (Application Service Provider) solutions in that SaaS providers are leveraging enormous economies of scale in the deployment, management, support and through the Software Development Lifecycle.

    What is Cloud or SaaS Software?

    Software as a Service (SaaS, typically pronounced 'sass') is a model of software deployment where an application is hosted as a service provided to customers across the Internet. By eliminating the need to install and run the application on the customer's own computer, SaaS alleviates the customer's burden of software maintenance, ongoing operation, and support. Conversely, customers relinquish control over software versions or changing requirements; moreover, costs to use the service become a continuous expense, rather than a single expense at time of purchase. Using SaaS also can conceivably reduce that up-front expense of software purchases, through less costly, on-demand pricing. SaaS lets software vendors control and limit use, prohibits copies and distribution, and control all derivative versions of their software. This centralized control often allows the vendor to establish an ongoing revenue stream. The SaaS software vendor may host the application on its own web server, or this function may be handled by a third-party application service provider (ASP). This way, end users may reduce their investment on server hardware too.

    Save Money with Cloud or Hosted Platforms

    Most SaaS platforms intend to provide the following:

    Tenancy – The ability to distinguish one user from another in the data and execution aspects of a hosted application is a major tenet of SaaS. Generally, the concept of tenancy is void in traditional on-premise installs and can complicate architectures beyond what was traditionally accepted.

    Scalability – The idea that a successful application will buckle under its own popularity is never good. Being able to accommodate your aggregated customer base is a must, and planning for success is a requirement.

    Reliability – What good is a SaaS application that isn’t up?

    Hardware Infrastructure – As a vendor, one of the operational headaches of SaaS applications is dealing with an enterprise-grade hardware infrastructure.

    Value Added Services – A good platform should endow the application it hosts with value beyond what was developed by the vendor. The value should benefit the end user.

    Ecosystem – As the number of vendors that host their applications on a given platform increases, and as the number of users using those applications increases, an ecosystem begins to develop. Ideally, this ecosystem allows all parties the ability to investigate and exercise their right to connections between ecosystem members, deriving value beyond that offered by any single SaaS offering.

    Here is a good white paper on Saving Money with SaaS

    https://www.givainc.com/white-papers/Save-Money-with-Software-as-a-Service-SaaS.htm

    IT Help Desk and Customer Service Metrics and Reports

    Here are some metrics to measure your help desk and customer service operation by:

    What kind of help desk or customer support organization are you running? As you can see the cost per call is significantly different. This will impact the Return on Investment (ROI) of your help desk or customer support organization. Of course, the strategic stage help desk has the highest customer service and the highest first call resolution rate.  Customers also call the help desk or customer service organization less often as the strategic organization has taken many proactive steps to reduce call volume by addressing the root cause of calls to the help desk or customer service organization.

     

    help-desk-bar

    Reprinted from CIO Magazine

    Here are two great White Papers on the topic:

    https://www.givainc.com/white-papers/customer-service-best-practices.htm

    https://www.givainc.com/white-papers/help-desk-best-practices.htm

    Measure Results -Strategic Customer Service and IT Help Desk

    Here's the last thought on making your customer service or help desk strategic:

     

    > Demand accountability and measure individual agent performance. Every help desk must operate with a sense of urgency. Individual agents must be measured against a set of performance goals such as calls per month, customer satisfaction and first-call resolution rate. By establishing individual goals in each area, a manager can ensure that agents are both efficient and effective in delivering service.

    Meet with users. Close the cycle. Internal marketing improves customer satisfaction—even without any improvement in the variables typically associated with happy customers: average speed of answer, call abandonment rate and first-call resolution rate.

    Becoming strategic doesn’t happen overnight. In most cases, the process takes one to two years. Additionally, the cost of support often increases during the transition phase. If you are prepared for this and are willing to stick with it, the rewards of being world class will more than justify any short-term increase in cost.

     

    Some related white papers on this topic:

    https://www.givainc.com/white-papers/index.htm

    Strategic IT Help Desk and Customer Service

    Here are 2 more thoughts on how to make your help desk or customer service center strategic:

    > Establish performance goals. Goal setting is a necessity in any project undertaken to improve help desk performance. At the very lease, the help desk should have performance goals for customer satisfaction, cost per call, call abandonment rate, service-level compliance, first-call resolution rate and cycle time.

    > Focus on customer communication. Failure to manage customer expectations may be the most common problem in the industry. Over communicate with users—before, during and after each call—to ensure that their expectations are properly set. Every user should have a copy of the help desk SPL. During any call, make sure users are advised where they stand in prioritization. First-come, first-served queuing can work when there is no backlog of callers, but all users throughout the enterprise should be appraised that the company’s business needs are key to any incident severity ranking system and projected resolution time. Finally, when closing an incident, agents should ask callers for some quick feedback on help desk performance.

     

    Here are some great white papers on the topic:

    https://www.givainc.com/white-papers/index.htm

     

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