This post was written by Gregory Vial, PhD Candidate in Information Systems and former database administrator at C3 Solutions.
It seems that every now and then new buzzwords pop up, whether in newspapers and magazines (yes, they still exist), the Internet and everyday conversations with people. Today, slightly irritated by some of the commercials I have been seeing in the media, I wanted to talk about Software as a Service, or SaaS.
When we are looking at the history of IT in organizations, it seems that our track record is somewhat mitigated. Failed implementations, delayed deliveries, budget overruns are only but a few examples of issues that C-level people think of when they hear about a “great new tech”. The very recent example of the major hiccups of the U.S. healthcare web platform springs to mind as I write this. All this happens despite the large sums of money thrown at these systems and the fact that they are developed by vendors who are supposedly highly competent. Heck, if I were a CIO, I would worry too when I hear about a “great new tech”…
It is with these images in mind that I want to talk about SaaS, what it can give, and what issues it may also trigger. The great promise of SaaS, like many pieces of software, is that it allows you to focus on the business rather than the technology. By moving some of the technological burden outside of your organization, you effectively free up some resources to do other, more interesting things (and by that I mean things that bring in $$$).
First, the idea behind SaaS is not really new. Basically, one pays to consume a service, except the service in this case is software. You may pay for it on a monthly basis, on a per transaction basis, or a combination of both. Either way, the promise of SaaS lies in the fact that the vendor takes care of the burden of maintaining the hardware and software infrastructure for you. In most cases, you will simply access the software via a browser interface.
In theory, this is a win-win, especially in models where pricing is proportional to usage. Use it more, pay more. Use it less, pay less. Doesn’t that sound great if you run a seasonal business? In the “old days”, the fancy equipment would sit largely idle most of the year while it would still require maintenance, upgrades, and incur other related costs (e.g., depreciation of asset).
NOTE: The Cerasis Rater, the Cerasis transportation management system, is considered a software as a service, but the price to use it does not increase as you have more users or use it more often. Our business model provides this software as a service, in conjunction with managed services such as claims, freight accounting, freight auditing, and carrier relations, and there is no cost to use our tool, only the cost of your freight invoice from us.
But perhaps there is more to it than that… And I would argue that going for SaaS or switching some software needs to SaaS simply for the sake of money is probably not a good idea. If we look at IT as something that can potentially generate value for a business, it can take on a strategic value of its own. Instead, we often look at IT as a cost center that we want to keep under control. This is arguably a recipe for disappointment, unless your strategy is to compete exclusively on costs. And even then, Wal-Mart may compete on costs but its investments in IT are pretty impressive.
So the argument here is to look beyond the money you can save and look into the value you can create with SaaS. Perhaps this means that costs will not be lower with SaaS. However you may gain a competitive advantage. Take the example of an ERP (enterprise resource planning, e.g., SAP). ERPs are great but they are heavy and often effectively create templates for “best practices” that end up being followed by organizations implementing them. Bottom line, the best practice becomes the baseline for everybody and therefore, not a source of competitive advantage. If on the other hand, you do your homework and find a way to answer your business needs using a variety of interconnected pieces of software (e.g., some using SaaS, others not), you may not only retain but also create a competitive advantage. In other words, rather than using a standardized pipeline, you can assemble the puzzle yourself and truly shape it to your business’ needs.
So, to SaaS or not to SaaS? The question is more: what are your business needs? How can you answer them? If it turns out that a SaaS vendor holds the answer to these questions, then SaaS away. If not, then don’t. We tend to be blinded by the trendy things but the essence of conducting business has not changed. In that respect, one must find the technology that answers one’s needs rather than trying to fit a clunky piece of software for the sake of it.
There is some research that is starting to pop out on these issues. We are moving away from some of the technical questions related to SaaS and looking into the business questions that SaaS can help answer. This is a good thing, because we will be able to move away from the trendy toward the essential. So to finish on this, here are some of the questions which I think are relevant when considering going for SaaS. As you will see, many of these questions can deal with any piece of software, whether or not it is based on the SaaS model.
So, unlike what some of these commercials claim, there is no miracle, no silver bullet. SaaS is just another option availble to your business. It may be the best thing since sliced bread, but that is up to you to decide.
Written by Gregory Vial, PhD Candidate in Information Systems
Blog, originally posted at http://gregv2013.blogspot.ca/
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