Wednesday, February 25, 2009

Software Model Gains Government Ground

More vendors are touting a software model for government use that involves applications being delivered to a user through an Internet connection. Industry is calling this model SaaS, or software as a service. According to an industry source, the service is paid for based on a subscription sales model while the software applications reside in the SaaS provider's data centers and can be delivered to end users over a variety of devices, from cell phones to PCs to thin clients. The application's data could be maintained in the provider's data centers, or on premises within the government organization itself.

"The attractiveness of the SaaS model for the customer is that it can significantly reduce the user's up-front investment in software, computer processing, and storage. It also allows the supplier to offer competitive pricing by leveraging its economies of scale," according to an International Trade Administration report. SaaS has been driven in recent years by significant technological advances, notably faster broadband networks, so-called Web 2.0 innovations, improved security technologies and data centers that have virtualized computing and storage resources, the report said.

The document states that concerns about data security and privacy overseas have emerged as potential trade barriers for U.S. SaaS firms. "Vendors have come up against restrictions on trans border data flows in Asia that ban off-shoring of any banking and telecommunications data processing and, as a result, adversely affect their SaaS sales," the paper stated. They have faced resistance in Canada and Europe as well as from some agencies, governments and businesses that are concerned about data confidentiality and the risk that U.S. intelligence organizations could access sensitive information at will.

Timothy Miles, who authored the report, attended a Wednesday conference on the topic held by the Software & Information Industry Association. Zach Nelson, president and CEO of NetSuite, touted SaaS as being cost effective, customizable and improving productivity. "There is a huge opportunity for government agencies to embrace software as a service, to help improve transparency and drive greater efficiency across all levels of government," a Google spokesperson said.

Microsoft added: "Agencies today are examining how policies will evolve to address everything from privacy to security to legal issues. The trade-offs to take advantage of the efficiencies and lower total cost of ownership provided by cloud computing will be balanced against an agency's ever-evolving security concerns." -- Winter Casey