Online software delivery is a simple concept. The first generation of online software delivery, the Application Service Provider (ASP) model, failed to meet reliability and quality standards. Companies were cautious to adopt, not wanting to send sensitive information across the Internet. As a result, some vendors dropped ASP in favor of a “hosted” software model (see “Should You Lease or Own?” IT Insight, June 2001, p. 12).
The second generation of online software delivery, Software as a Service (SaaS), is a growing concept. Information technology (IT) research company Gartner Inc. expects that by 2008, 50% of the U.S. software market will be purchased as a service. The SaaS market accounted for US$137 billion in the United States in 2005 (see Software as a Service, CIO Insight Fact Sheet, 2007). Your organization may already use SaaS for online meetings and collaboration, sales management, or payroll processing.