Software-as-a-Service (SaaS) and the Emerging Revolution in Enterprise Applications

April 1st, 2007

By Michael P. Binko, APR
CEO and President, Kaulkin Information Systems
April 2007

Enterprise software and application deployments have often been a challenge for growing companies – particularly for small-to-medium enterprises (SMEs). The challenges have been how to reduce total cost of ownership (TCO) while ensuring maximum return on technology investments (ROI).

Until recently, SMEs had few options other than working with off-the-shelf software applications that were primarily developed and packaged in a manner best suited to larger companies with big budgets and properly staffed IT departments.

Enter the revolution: Internet and pervasive broadband networking.
Over the past couple of years, Software-as-a-Service (SaaS) has been changing the software industry at fundamental levels. The SaaS revolution primarily benefits SMEs, as the basic tenets of the movement include:

  • simplicity
  • flexibility
  • security
  • scalability
  • predictable costs

The Ease-of-Use Factors

Simplicity is a fundamental element of SaaS. In essence, enterprise end-users just need a computer, a web browser, and their username and password to have immediate access to their critical software applications – regardless of whether they’re in the office or on the road.
This mobility is one example where simplicity fuses with flexibility. For example, a junior account manager could upload new prospect information at her desk during an initial telephone conversation. A co-worker could immediately access this information while on the road.

SaaS simplicity and flexibility also streamline workflow and business rules. Updates or senior staff approvals are uniformly completed in accordance with pre-described workflow routines. Subsequent changes and workflow routines would then also be managed, reviewed and approved as they occur.

Safe and Sound

While ease-of-use and data management benefits are readily apparent, many SMEs seem hesitant to adopt SaaS because of perceived security risks. The fact is that SaaS is just as safe, and often more secure, than traditional client-server or distributed “gold-disk” software. A few reasons for this include continued enhancements in data center security and the fact that updates to SaaS applications can be automated and immediate, with built-in assurance that all users are operating with the most up-to-date versions.

This can be a tremendous time and budget saving aspect of SaaS for bootstrap and growing businesses alike. Furthermore, for companies operating in heavily-regulated industries such as banking/finance, healthcare/medical, legal, government and others, selected SaaS services incorporate baseline compliance factors (such as up-time assurances) and sophisticated search tools as a part of doing business.

Examples include support for NASD and SEC data archiving regulations in banking and finance and eDiscovery on the legal front. (NOTE: Keep an eye on future issues of The Bulletin for more in-depth discussions of these topics.)

TCO and ROI

Predictable costs and scalability are also two critical components that make SaaS a no-brainer for SMEs.

No longer does the management team need to schedule an onsite update of users’ computers, as edits to user profiles and upgrades to the applications are all completed automatically and remotely.

This alone can mean a reduction in IT consulting expenses and can free-up internal IT teams to concentrate on addressing other strategic needs. Pricing models for SaaS also typically have low points of entry and only increase as an SME grows or increases their use of the SaaS application.

In short, the SME has little risk in testing the SaaS waters and can manage growth as well as the associated costs in a very scalable manner. In addition, the true TCO and ROI benefits shine through for the SME with the simple fact that hard-costs of application server equipment and data center infrastructure are managed directly by the SaaS provider. Organizations with large, well-staffed IT teams, however, would not enjoy the same return on investment.

So, even though the story of SaaS is in its early chapters, SME companies across a wide variety of industries are realizing that picking up the flag of revolution, in this case, is decidedly in their best interest.

Mike Binko is President and CEO of Kaulkin Information Systems, provider of secure, affordable document management and workflow systems. Mike can be reached by email, or at 301-907-0840 ext. 115.

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