How SaaS and IaaS are Changing the IT Landscape (Part I)

Companies are constantly looking for talented IT folks, but if you think you are a talented IT person who is looking for a good home, and by home I mean a good company where you want to stay and grow your career for awhile, then having just the traditional skill sets are no longer enough.

Say for example, you are a talented IT person working at a really exciting startup company with about 200+ employees. Everyone is fairly technical and have enjoyed using a Linux Sendmail server for all their email needs. But the company is really starting to get big enough where it would benefit from some 21st century email technology such as group calendar, email syncing to mobile devices and better organized email distribution lists. You say, great, no problem, let me build a Microsoft Exchange server for the company. It will satisfy all the email related requirements. It will do group calendar, sync email to everyone’s phone and organize company events and more. And you can build it with multi-site redundancy so the whole thing will never go down, it will cost less then $40k with hardware and software all included, and can be completed, from planning to deployment, in under 2 months time. Wow, that’s pretty great. The fact that you have the knowledge and know how to build something like that is great. But what if I told you I could have the whole thing done in just one day. Actually to be more precise, I could probably have the whole thing done by lunch time and it would also cost less. You might be scratching your head and say “No freaking way, there is no way one person can do all that in one morning”. Well, technically you are right, I can’t do it, but who says I have to.

This is where SaaS comes in. SaaS stands for Software as a Service. To those who are not familiar with it, you really should get familiar with it. Software as a Service targets exactly the scenario I mentioned above. Problems such as corporate email, phone services, and even corporate file shares are yesterday’s problems. There are plenty of SaaS companies out there who have mastered these technologies so you and I can focus our time on bigger problems.

To finish up on the example used earlier, there are plenty of Hosted Exchange Providers out there. These are companies who will manage your corporate email with as little as $4 per mailbox per month. For a company with 200 employees, the cost is merely $800 a month. I know you might cry foul at this point and say “This is only a monthly cost; it will add up and what about security?” Great questions. With approximately $800 a month, a yearly cost would be $9,600, which is still easily 4 times below the $40k estimate; this means this SaaS solution will be well below cost for 4 years compared to your in-house solution.

Moreover, don’t forget to calculate your salary. You are a talented IT person whose salary is well above minimum wage. Let’s just say for ease of calculation, you make $100k per year. Now your Exchange solution has a yearly operational cost of $100k plus the original $40k one time setup fee. Wait, that’s not really a one time $40k setup fee is it?! There is license renewal fee for the Exchange servers, otherwise you’ll be stuck with the current version and can never upgrade. Oh, and what about the server hardware, there is a support cost for that too right? We simply can’t let our Exchange server hardware go without warranty. Shoot, what about hiring a backup for you? You will get sick or go on vacation someday, now the company has to hire another person just to make sure that in your absence somebody can take care of the Exchange server. Speaking of backup, we have to back up the data on Exchange, too. Now we have to invest in the backup strategy just to make sure our in-house Exchange server is well cared for. With all these little details in mind, that $4 per mailbox per month should start to sound really good to you now.

Now $4 a mailbox certainly sounds like a deal, but what about security? We can’t let an outside vendor manage our sensitive information, such as email. Or can we? Well, you will be relieved to know many of these companies take security very, very seriously. Most of these companies comply with SSAE-16 (SAS-70 in the older days), and some of them have additional certification such as PCI, FISMA…etc.  All these certifications will save you a ton of time if the company you work for is a public company or plan on going public. Third party auditors generally accept certifications from your service provider with little to no questions asked. So whatever SaaS services you are using, so long as they are certified, you are good in those areas. Please don’t mistake me as saying all SaaS are safe and secure. You will still need to do your homework and make sure whichever SaaS you choose is the right fit. But if you do your due diligence, you’ll find often times these SaaS providers take their security seriously, probably even more than you would.

Image courtesy of scottchan/

Image courtesy of scottchan/

Still not convinced? Take a look at the some of the wildly successful stories out there, such as SalesForce, Google App, and iCloud. I’m not here to endorse any companies nor any products, but can you imagine how long it would take for any company to deploy an in-house solution that can compare to what SalesForce is offering? It would take a tremendous effort, financial resources and time to deploy a similar product in house, and the biggest question is WHY? This is not even your company’s core product. SaaS providers have mastered their trade. They have looked at every corner of their business and squeezed out every inefficiency so they can complete with other SaaS providers that are in their space. They have already invested tremendous effort, financial resources and time to deliver their refined products to you, so that you don’t have to reinvent the wheel. Take advantage of these SaaS offerings. Save the man hours and the money to spend on projects that really matter to your company’s success.

Lastly, please understand that I’m not here to persuade you to buy any products or services from any SaaS providers nor am I saying that SaaS is a one size fits all solution. A solution that works for one company could be a disaster for another. Picking the right technology to solve a given problem requires diligent study. However, I simply want to persuade you that the old days of IT, where the IT team spent most of their time managing core functions such as email, file shares and phone services, are over. There are ways that we can do IT faster and cheaper now.  

Check out the next part of this series where I talk about how IaaS is changing the IT landscape (click here: Part 2).

-David H.


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