Peer to Peer

June 2009

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Page 53 of 99 54 Peer to Peer I n the dot-com boom era of the late 1990s, we called internet-based applications "application service providers," or "asPs" now we call similar offerings "software as a service" or "saas". Why the change in terminology? are these two things really different, and if so, how? Both ASP and SaaS providers share a common goal of eliminating IT overhead from business. Hardware, networks, client-server configurations, software licenses and the human resources needed to maintain them are outsourced, and the client organization eliminates those expenses. However, the similarities between ASP and SaaS end there. So what distinguishes these two technologies? SaaS organizes customer resources more efficiently. Perhaps the biggest difference between ASP and SaaS providers is how they organize computing resources. SaaS customers all share the same environment; servers, code, configurations and database layouts are identical for everyone on the system. This ability to house all customer installations within the same environment is known as "multitenancy." Multitenancy is a term derived from an analogy to tenants in a building. Instead of customers renting space in their own individual buildings (the ASP model), all customers rent space in the same building. ASP providers, on the other hand, essentially transplanted entire servers and networks from a customer's location to their own data centers. For each customer they supported, they maintained dedicated setups. This business model resulted in data centers filled with servers and configurations of a hopelessly heterogeneous variety. SaaS enables economies of scale. Since all customers leverage the same code base, database design and machine environments, huge economies of scale can be achieved through SaaS. As more customers, or tenants, come aboard a SaaS solution, costs decrease for the provider. Upgrades to the system become trivial, since they apply to all customers and no customizations have to be considered. As a result, SaaS companies are able to provide low monthly fees to consumers for access to applications that otherwise can be very expensive. In contrast, in an ASP environment, each time another customer comes aboard, the provider must set up a dedicated and highly customized installation. Upgrading all customers to newer versions of the software means taking into account the complex setup for each individual customer. This inability to control cost and complexity was one of the elements contributing to ASP's failure in the post dot-com era. Fun with acronyms or a sweeping technological shift? by Larry Port ASP vs. SaaS V A C A N C Y SaaS INN

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