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  International Journal in Foundations of Computer Science & Technology (IJFCST), Vol. 3, No.6, November 2013 DOI:10.5121/ijfcst.2013.3601 1 BUSINESS AND TECHNICAL REQUIREMENTS OF S OFTWARE - AS - A -S ERVICE :   I MPLICATIONS IN P ORTUGUESE ENTERPRISE BUSINESS CONTEXT   Virginia Maria Araujo and José Ayude Vázquez Informatics Department, University of Vigo, Vigo-Pontevedra, Spain  A  BSTRACT    Software-as-a-Service (SaaS) is a viable option for some companies bearing their business processes. There is a considerable adoption rate, with companies already using more than two services for over two  years. However, while some companies have plans to put more business processes supported by these services in the near future, others do not know if they will. They have several concerns regarding the software providers’ service level. These concerns are mainly technical and functional issues, service availability and payment models. There are major changes compared to the traditional software that have implications on how the software is developed and made available to the users. The existing research addresses specific aspects and few studies give a broader view of the implications of SaaS for anyone who develops and provides software, and also for those who consumes it as an end user. What are the real needs of the Portuguese market? What fears and what is being done to mitigate them? Where should we  focus our attention related to the SaaS offering in order to create more value? Thus, to analyze these questions four exploratory case studiesare used to assess the possible implications of SaaS on software developers or software providers based in Portugal and also on end-users. This article appears in the context of a realistic and deep research that includes the involvement of managers, leaders and decision makers of Portuguese companies, to realize what actually constitutes a  problem in SaaS and what effectively companies would like to have available in this offer. The results of this study reveal that SaaS effectively constitutes a very interesting and solid solution for the development of Portuguese companies, however there is a lack for greater efforts particularly in terms of customization  for each customer (tenant) and integration with the back-end on-premise applications.  K   EYWORDS   Software-as-a-Service, Business model, Software Architecture, IT investment, Software Industry. 1.   I NTRODUCTION   At the beginning of the current millennium the term SaaS is officially introduced. Although, until today, there is still no consensus about the concept of SaaS, it can be defined as a software distribution model that consists in providing a piece of software, application or service to multiple customers or tenants through the Internet (multi-tenant). The SIIA (Software & Information Industry Association) in the article entitled "Software as a Service: Strategic Backgrounder," says - "[...] In the Software as a Service model, the application or service, is deployed from a centralized data center across the network - Internet, intranet, LAN, or VPN - providing access and use on a recurring fee basis. Users "rent", "subscribe to", "are assigned" or "are granted access to" the applications from the central provider" [1].  International Journal in Foundations of Computer Science & Technology (IJFCST), Vol. 3, No.6, November 2013 2 SaaS is a very attractive alternative for small business, medium and large enterprises. The SaaS approach has the potential to transform the way the information technology (IT) departments relate to each other and even what you think about your role as a service provider [2]. There are, however, still several concerns and challenges that developers and SaaS providers have to overcome. Keep in mind that technical issues should be early identified since the’re changes compared to traditional software development. Most organizations know well the value of information and how important data security is. The customers will pay for the use of the service that is configured or customized according to their specifications. This can, for example, require that their data should be separate from other customers. In this case, the provider has to ensure the full isolation that can pass through the separation of the data in its own database for that customer. Another aspect that is important to consider about the development this type of software is the business model that can be used because it can involve higher costs and larger issues on software development. Based on this discussion and to answer the research questions we intent to establish an involvement with the managers and owners of Portuguese companies, in order to evaluate the use of SaaS in their organizations and to confirm the hypothesis that SaaS brings benefits and  potentiates their development. We selected companies for the study sample to address aspects of SaaS from different points of view to have a broader and more realistic purpose of the investigation. Existing research examines specific aspects such as risk factors and adoption [3], [4] [5], and technical aspects [6] [7] [8]. A study where we take a more holistic view considering the implications in the development, provision and use of SaaS in different types of businesses (small, medium and large companies) is more than justified and even more in the Portuguese market where this research theme is still very sparing. Examine the issue from different points of view from all stakeholders, analyzing the individual aspects and interdependencies between multiple domains, allows taking a broad view of the concept and its implications for thus identify aspects and issues for future research. 2.   L ITERATURE REVIEW Until today there is no consensus about the concept of SaaS. According to Chong & Carraro, if five people are asked about the concept of SaaS probably we get five different answers [2]. However, the experts are in agreement about some fundamental principles that distinguish SaaS from the software as a traditional product and on the other, from the simple web site. Gartner defines “cloud computing" as a style of computing where IT capabilities are massively scalable and delivered as a service to external users of technologies [9]. Cloud computing is a broader subject that cannot be confused with SaaS, which uses cloud computing only in its architecture [10]. In terms of the SaaS architecture, there are many doubts and questions about the most effective model to use. Desisto and Paquet present the four architectural models most used by SaaS developers and providers [11]. In the definition "Software deployed as a hosted service and accessed over the Internet" [2], we see that it does not describe any specific architecture for the software, it says nothing about the specific technologies or protocols to use, does not draw a distinction between service-oriented to the business and to the general consumer, and does not require specific business models. According to this definition, the main differences from SaaS are the place where the application code is executed, how it is implemented and how it is accessed. Analyzing from the general to the specific, we can identify two main categories of software as a service [12]: a)   Line of business services, offered to the businesses and organizations of all sizes. The lines of business solutions are usually large, customizable, aimed to make easier the  International Journal in Foundations of Computer Science & Technology (IJFCST), Vol. 3, No.6, November 2013 3  processes execution such as finance, supply chain management (SCM) and customer relationship. Typically these services are provided to the customers through a service subscription.  b)   Consumer-oriented services offered to the general users . The customer-oriented services are sometimes provided through a subscription, but are generally provided free of charge and funded through advertisements. Desisto and Pring said that despite the expansion of SaaS, switching to this model cannot be applied in all kind of software and in all type of organization. Taking advantage of software and services, it is possible to maximize the choice, flexibility and capabilities of users in general [13]. However, before the move to a SaaS model, organizations should first obtain answers to several questions, such as [13]:    What are the business and IT needs?    What benefit has the IT department in adding SaaS applications to their service  portfolios?    Is there a need for customization and integration?    What are the implications of adding hosted applications in an external environment to the organization?    What are security levels?    What is the roadmap of the services? Users often face difficult choices. SaaS applications are easy to use and have lower implementation costs. SaaS providers have the advantage of lower-cost implementations compared to the traditional software. However, the thin client SaaS applications do not have the full functionality and performance of desktop systems. Moreover, it is always a challenge to integrate SaaS applications with on-premise backend systems. There are always risks of adopting a SaaS application and therefore there must always be a balance between the implementation costs and the application performance [4]. Exploring the adoption of SaaS, some studies reveal uncertainty factors, such as technical factors, process, economic risks or uncertainties associated with the functionality needs, as well as service volume. There is still a lack of research on the empirical analysis of risk factors for the delivery of SaaS applications [3]. SaaS solutions are managed and maintained by the provider, enabling customers to change the application ability and capacity without investing in new infrastructure, personnel training, or on new software licenses. The uncertainty around the service volume is no reason for the existence of incomplete contracts, since the service volume for an application can be measured using variables such as space storage, the volume of transactions and number of licenses. It is quite easy to develop metrics and set prices based on these variables, defining deployment models according to the ownership of the service [5]. According to Caldwell & Eid, although large scale businesses are less likely than small ones to consider SaaS solutions for the financial activities of GRC (Governance, Risk and Compliance), the experiences of managers show no significant drawback that prevents the use of SaaS solutions for SOX (Sarbanes-Oxley) and other types of financial activities of GRC. Companies should consider SaaS GRC solutions when [14]:    The data that could be achieved by the provider or other third parties are not regulated information or when the regulated information is available by the provider or other third  parties are contracted security services and effective access controls.  International Journal in Foundations of Computer Science & Technology (IJFCST), Vol. 3, No.6, November 2013 4    Compliance Officers cannot readily meet the need for support and maintenance of IT infrastructure that support to GRC activities.    The costs of a licensed application are more difficult to approve than the cost of a SaaS subscription (€10,000 per month for a SaaS subscription may be easier to justify than a € 400,000 investment to implement a licensed application plus the annual maintenance cost of 20%). Despite the advantages of SaaS, its adoption still causes doubts in many CIOs (Chief Information Officer), especially with regard to the security and confidentiality of data. This type of question is one of the obstacles to the growth and expansion of the SaaS model, making the decision harder  between either to adopt or not software as a service. Another concern is the service availability. Donna Scott worked with Robert Desisto and Alexa Bona, to draw the attention to the unplanned downtime costs of SaaS [23]. In many cases, integrating SaaS applications with local applications, means creating dependencies that require synchronization and data transfer between the SaaS solution and one or more internal applications [15]. To answer these concerns of integration with SaaS, software providers should  provide different options. Organizations have four options to solve the SaaS integration problem [16]:    Use the APIs (Application Programming Interface) and provider’s software technologies;    Use a SaaS integration technology from a third party;    Use integration solutions-as-a-service (IaaS);    Use professional services or a system integrator. SaaS customers should set their own strategies for integrating SaaS and must incorporate them in a holistic approach to multi-enterprise integration in all projects [16]. Companies should consider the flexibility and the implications of risk management in adding SaaS to their IT services  portfolio. The integration and customization are critical components in the successful SaaS architecture strategies, in a service centralized IT infrastructure [15]. The main activities of a SaaS developer and SaaS provider are the development , implementation and maintenance of software that support the business processes of its customers, giving them, by this way, a greater chance of creating value. When developing applications using these models, providers should consider several factors that are not present in the common methods of providing software. The differences between the developments of software to be delivered as a good service are clear. It is necessary to consider technical aspects that change the way how this new kind of software applications are being developed [6]. The SaaS business model is the balanced configuration of various elements being essential the scalability. This is the factor that allows us to explain the difference between ASP and SaaS [7]. Offering software as a service rather than as a software product requires changes on software developers and telecom operators. It is necessary to change the thinking in three interrelated areas: business model, the software architecture and operating structure [2]. The role of the  provider has to change radically from a remote application storage, to an active agent for management of a complex software ecosystem, where all the IT resources required are coordinated in order to maintain and create value for all parties involved [8]. From the literature review the conclusion is that SaaS is much more than a software distribution model and is a combination of business model, application architecture and operational structure.  International Journal in Foundations of Computer Science & Technology (IJFCST), Vol. 3, No.6, November 2013 5 3.  METHODOLOGY   The purpose of this paper is to study the motivations and concerns of Portuguese companies regarding SaaS and identify organizational implications and techniques in the transition to this type of solutions, as well as to realize the extent to which SaaS improves their efficiency and can  be a decisive factor for its growth strategy. For this, it is concluded to be more appropriate to adopt a research strategy based on a combination of research methods. We identified non-functional aspects and also technical aspects, based on the literature review and on a quantitative study results collected using a survey sent to developers, providers and SaaS end-users. Through the combination of methods, complementing the disadvantages of one method with the advantages of the other, it increases the reliability and significance of the research. A combined approach of quantitative methods with qualitative methods complements and enriches the research [17]. The researchers feel that the biases inherent in one method may counteract the biases of other methods. From the srcinal concept of triangulation of different data sources are being crossed quantitative methods with qualitative methods [18]. The current literature presents the following main reasons for the combination of methods: 1)   The results of a method can help develop another method; 2)   A method may be combined with another method to provide information on different levels or analysis units; 3)   The methods may have a higher purpose and more comprehensive, changing or defending marginalized groups such as women, ethnic and racial minorities, specific communities or people with disabilities, or those who are poor; This study uses a research strategy based on a combination of research methods sequentially. In first place a survey is used to get a broader view and to provide background information through a quantitative research, allowing subsequently to have a greater depth in qualitative research, helping to interpret and contextualize the qualitative results. Thus, the study starts with a quantitative analysis of data using two online surveys sent to a sample of Portuguese companies with the purpose of evaluating the adoption level of SaaS solutions for their organizations. One survey is sent to different types of businesses (small, medium and large) based in Portugal, developers and / or providers of SaaS solutions. A second survey is sent to companies that already adopted one or more SaaS solutions in their organizations, to collect the perspective of the users. The results of this first quantitative research complement qualitative research discussed in this  paper, which aims to understand the different types of Portuguese companies according to the  perspective of the decision maker, manager or director within its specific operational context and reality. In this research, data is collected through semi-structured interviews, face-to-face with the directors and managers responsible for IT strategy of their organization or business area. The interview is a standard tool for data collection and a primary source of information for case studies [19]. Two interview guides are elaborated. One oriented to the SaaS developers and providers and another addressed to SaaS users. Each interview is audio-recorded with duration of two hours. During the qualitative interview, notes are taken from the observations made by the interviewer / researcher. Mainly, all interviews are processed in an identical manner to permit identify the existence or not differences and what factors can explain these differences.
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