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Chapter 3 E-business infrastructure 169

either on budget or lower. There would be few cases of traditional applications where these
figures can be equalled.

Challenges of deploying SaaS

Although the cost reduction arguments of SaaS are persuasive, what are the disadvantages of
this approach? The pros and cons are similar to the ‘make or buy’ decision discussed in
Chapter 12. SaaS will obviously have less capability for tailoring to exact business needs than
a bespoke system.
The most obvious disadvantage of using SaaS is dependence on a third party to deliver
services over the web, which has these potential problems:

Downtime or poor availability if the network connection or server hosting the application
or server fails.
Lower performance than a local database. You know from using Gmail or Hotmail that
Multi-tenancy SaaS although responsive, they cannot be as responsive as using a local e-mail package like
A single instance of a Outlook.
web service is used by
different customers Reduce data security since traditionally data would be backed up locally by in-house IT
(tenants) run on a single staff (ideally also off-site). Since failures in the system are inevitable, companies using SaaS
or load-balanced across
multiple servers. need to be clear how backup and restores are managed and the support that is available for
Customers are effectively handling problems which is defined within the SLA.
sharing processor, disk Data protection – since customer data may be stored in a different location it is essential
usage and bandwidth
with other customers. that it is sufficiently secure consistent with the data protection and privacy laws discussed
in Chapter 4.
Single-tenancy SaaS
A single instance of an You can see that there are several potential problems which need to be evaluated on a case-
application (and/or data- by-case basis when selecting SaaS providers. Disaster recovery procedures are particularly
base) is maintained for all
customers (tenants) who important since many SaaS applications such as customer relationship management and
have dedicated resources supply chain management are mission-critical. Managers need to question service levels since
of processor, disk usage
and bandwidth. The often services are delivered to multiple customers from a single server in a multi-tenancy
single instance may be arrangement rather than a single-tenancy arrangement. This is similar to the situation with
load-balanced over
multiple servers for the shared server or dedicated server we discussed earlier for web hosting. An example of this
improved performance. in practice is shown in Box 3.9.

Box 3.9 Is my SaaS single-tenancy or multi-tenancy?

Smoothspan (2007) has estimated the level of multi-tenancy for different web services,
which is also dependent on the number of seats or users per customers. He estimates
that in 2006 Salesforce was running 40 Dell PowerEdge servers with 6,700 customers
(tenants) and 134,000 seats. This is equivalent to 168 tenants per server, and 3,350
seats per server! Although this figure suggests the disadvantage of multi-tenancy, he
also estimates there is a 16:1 cost advantage of multi-tenant over single tenant.