SaaS is a burgeoning segment of the software industry. With ubiquitous broadband and a move toward mobile, always-on Internet access, applications that once lived in an enterprise data center now run on-demand on the Internet, often with less hassle and cost than running them in-house.

SaaS sites have significantly different monitoring requirements from the other three site categories we’ve looked at. For one thing, they’re often targeted at business users rather than consumers. They’re also usually competing with in-house desktop alternatives—think Microsoft Office versus Google’s SaaS-based office offering, Google Docs.

From a monitoring point of view, SaaS is less about acquiring or converting customers and more about delivering an already-purchased service well enough to convince subscribers to renew their subscriptions. It's also about measuring productivity rather than a goal or an outcome. Salesforce.com, Standoutjobs.com, Basecamphq.com, Freshbooks.com, and Wufoo.com fall within the SaaS category.

Business Model

Figure 2-4 illustrates the basic elements of a SaaS site’s business model.

Figure 2-4. Elements of a SaaS site’s business model

1. An enterprise signs up for the site, presumably through a transaction process, and pays a usage fee.

2. This may also involve a per-seat fee for its employees or per-use fee.

3. At this point, the employees use the SaaS site. If performance is unacceptable, the SaaS site may be liable for an SLA refund and may receive helpdesk calls.

4. If the site is hard to use, employees may call the SaaS site’s support desk.

5. Numerous problems will lead to high support costs for the SaaS operator.

6. If, as a result of poor performance and usability, employees aren’t productive, the enterprise will cancel the subscription, resulting in customer churn, lost revenues, and higher cost of sales.

7. On the other hand, if users are productive, the enterprise will renew or extend its subscriptions and may act as a reference.

In the next chapter, we’ll look at some of the metrics you can collect to understand the health of your site. In the Appendix A, we’ll look at these metrics and show which of them matter for each of the four types of site.