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How software as a service makes business sense

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Software as a service (SaaS) has, since its “inception” approximately seven years ago, grown beyond its buzz word status to become a bona fide IT service offering with numerous and tangible business benefits.

Indeed, according to research authority Gartner, SaaS will represent 25% of business software revenue by 2011, which is significant by any standard.  
And one of the key factors behind the growth of SaaS is its ability to provide companies with benefits associated with commercially licensed, internally operated software, without the resultant capital outlay.
CIO’s worldwide are now opting for SaaS as it offers faster deployment times, lack of up-front licensing and infrastructure costs and importantly addresses business processes – freeing the organisation to focus their resources on custom processes.
Talking at BMC Software’s recent Forum Event, held in Johannesburg, Paul le Roux, of GijimaAST comments that the cost-savings associated with SaaS cannot be ignored.
“The reality is the traditional software buying model is becoming obsolete, there is a huge change in the market space,” he says.
“SaaS offers a better end-user experience; alleviating, among others, lengthy implementation processes, annual maintenance fees which can be as much as 25% of the licensing fees, and capital investment.”
“Indeed, with SaaS companies will find that they will be up-and-running in no time and be able the change direction if needed, which is not always the case with packaged solutions.”
SaaS is, therefore, ideally suited to the agile business.  Due to its very nature, which is service-based and delivered through an on-demand business model, it enables companies to readily respond to customer demand and market challenges.
Furthermore, when compared to licensed software it offers a myriad of benefits.  
A recent survey by IDC stated that only 14% of executives of large companies maximised the software they had licensed. With SaaS this is not the case as a company only pays for the software it uses, which in turn enables for maximum usage.
Obsolete software, gathering dust in some desolate back office, is therefore a thing of the past.
In addition, SaaS is not only restricted to enterprise-wide deployment but can be utilised in a more focused, departmental manner.
Says le Roux: “With SaaS you are buying success as opposed to software. The value of the software is driven by business experience and benefits and not by packaged functionality.
“SaaS also allows for ongoing interaction between vendors and their customers, and importantly, enables companies to focus on delivering business value,” he concludes.