Software as a Service isn't anything new.  The concept first began to circulate after a white paper called "Strategic Backgrounder: Software as a Service" was published by the Software & Information Industry's (SIIA) eBusiness Division in February 2001.  The concept, models and technology have all had plenty of time to adjust and adapt to the changing business landscapes since then and with many organisations reviewing their costs and internal processes over the last 12 months, now should be a golden age for Software as a Service.  If it isn't immediately apparent to you why, then read on.

Cheaper: unless you are a start up then you will have some form of technology infrastructure.  This could range from tiny in-house servers and applications right up to multiple data centres with hundreds of dedicated staff.  Implementing or supporting any internally managed application incurs costs but obviously this varies depending on the project scope and complexity of the application.  Something many organisations struggle to fully understanding is the total cost of ownership of any given application.  Understanding some of the individual component costs is possible; the application license fee and the server hardware for example.

What is very difficult especially in medium sized organisations upwards < is understanding the part component costs associated with the application.  What contribution is any given application making to the overall costs of IT infrastructure and support?  Backup and recovery costs, support and maintenance resources, data center facility costs, these are all required and because they already exist many organisations fail to recognise them as costs associated with individual applications.  These are classic examples of hidden costs and therefore are very difficult to report on.

Read: New Insights for Asset Managers: How Technology Can Drive the Most Effective Middle Offices

For Software as a Service to be a strategic business winner it must offer two things on the costs front; it must reduce overall costs and it must be a transparent cost.  I believe SaaS is very capable of delivering on both these cost requirements.  The sweet spot for costs savings is right in the middle.  Huge enterprise systems used by the entire organisation can be outsourced with cost benefits but they are large projects and require a lot of time and effort to be executed properly.  Tiny simple desktop applications can also be outsourced and delivered as SaaS but the cost savings can be tiny also.  The mid sized, multi tire departmental applications requiring server side setup and support are the best fit for SaaS.  Switching to outsourced delivery and maintenance of these applications can be done quickly with visible cost savings.  Having all the costs wrapped up into one place also provides complete cost transparency for each application.  The business knows the exact cost of using the service so can see the total cost of ownership quickly and easily.

Faster: unless you have IT and business management resources sat idol then implementing a new or upgrading an old internally managed application is going to take time.  How long does it take to get approval for new server hardware in your organisation?  What about getting the backup and recovery configured, tested and working?  How long does it take you to plan and schedule IT resource for internally managed application upgrades?  These things take time because your business has many things to focus on and projects must be scheduled properly.  The simple answer is to make this someone else's problem.  If you have made a business decision to deploy a software solution you don't want to wait until next year to get it.  Deploying an externally managed software service is quicker than deploying it using internal resources – much quicker.  Getting your chosen solution to a production ready state in a shorter time frame quickens the return on investment.  This is a real business benefit of Software as a Service.

Better: unless you have a very fast direct network link back to your software vendor you will know that support issues requiring data cuts or developer input take time.  Getting a backup of the system database, encrypting it, copying it over to the vendor and then waiting for them to repeat the process in reverse means you are wasting valuable time while the vendor hasn't even started to fix the problem.  Just getting a software vendor to understand the issue and attempt to reproduce it locally can take longer than a day.

There is also the risk of the problem being caused by local environment issues such as changes made to operating system or database management system that have caused the application to start misbehaving.  When this happens the software vendor finds it very difficult to reproduce your environment and therefore understand the problem and its root cause.  All this complexity makes application support difficult and frustrating for the business users.  When this type of thing happens during a critical period in your process cycle then the effects are magnified greatly.  The support model is much simpler in a SaaS model.  The IT environment is under the control of the software vendor.

This greatly reduces the chance of system changes being made that will break the application.  With the application being available to the support and development teams of the vendor it means issues are handled without the need for client IT or application support to be involved.  The vendor is able to start work on the issue much sooner resulting in a better support experience.  Databases don't need to be copied or sent to the vendor, reducing the risk of loss or misdirection.  Having the application hosted with the vendor also negates the upgrade process.  This is a huge advantage allowing you to stay up to date with major releases without having to dedicate precious local resources to upgrade projects or run the risk of falling so far behind you jeopardise your support agreement.

So, three compelling reasons why Software as a Service can simplify your business application life cycle.  By transferring the workload and responsibility of application implementation and management to the software vendor it is possible to save money, achieve faster ROI and benefit from higher more responsive levels of support.  Cheaper, faster, better.

Looking for improvement in your middle office?

BlogCTAInsights

Recent Posts