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SaaS: rather wait and see

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Software as a Service (SaaS) is changing business’s approach to application licence models. By allowing businesses to pay for only the services they need, SaaS promises richer functionality and support for reduced costs. This in theory would make it a viable alternative to simply purchasing applications for both smaller and larger organisations. Keith Fairhurst, director: EOH Consulting, warns that despite SaaS taking off in the international market, there is much to be said for the “wait and see” approach local businesses are taking …

Just like any other business investment, SaaS, its potential impact on your company and how you do business need to be considered before you sign up for the service.
Perhaps the best way to understand its role and function is to look at how IT applications and platforms have evolved over the past 20 years. In the 90’s for example, we saw the introduction of “functional solutions”, where businesses made use of disparate systems for their core functions and linked these using point-to-point solutions. 2000 brought “integrated solutions” – essentially the birth of large ERPs.
Here we saw a trade-off between best of breed and ease of integration. Businesses settled for less than the optimum fit based on the ease with which they could now link their applications.
In contrast, 2005 saw the introduction of “service solutions”, with the development of Service-Oriented Architecture (an application architecture in which invokable interfaces are called to perform business processes). The next logical step in the process is now literally “buying” a service – SaaS. These most recent developments are forcing businesses to make a choice between vendor agnostic flexibility and the legacy products they have already invested heavily in.
Software as a Service is arguably thus a “new” offering, with corresponding challenges and opportunities. That being said, perhaps the key opportunity inherent to SaaS is the fact that it enables you to literally “test” the latest solutions before investing in them.
Because technology and tools are changing all the time, companies are constantly faced with the dilemma of deciding which of these are good enough to bring in-house. SaaS provides a viable means of assisting with this decision.
By “renting” a service, a company is able to change this expense from that of capital expenditure to operational expenditure: it’s not forced to buy any additional hardware, waste time during installation or bring in any specialised skills. The company rather merely tries out the service for a certain period of time. This is the current sales tack being taken by most SaaS vendors locally.
This makes SaaS a particularly attractive option for South African businesses. Companies struggling to source skills and without the means of investing heavily in IT infrastructure can thus continue to remain competitive. What local companies considering SaaS need to keep in mind, however, is the fact that SaaS requires a maturity of thinking and understanding on the part of management before you just go out and invest in it.
Management must understand how it functions and have realistic expectations as to what it will deliver. They must also bear in mind how local limitations on connectivity will impact on its effectiveness.
In addition to these considerations, SaaS is usually a viable option provided it’s used as a testing mechanism only. By this I mean you literally experiment with it in the short-term using non-core functions such as data cleansing for example. If you’re happy with the results you achieve using it, you should then consider bringing the function in-house.
This is because SaaS often works out to be more expensive on a month to month basis than if you invested in it yourself.
With SaaS promising big things for companies both big and small, possibly the best way to ensure it’s an investment you don’t regret is by running a pilot. In this way, you’ll have the opportunity to test numerous things simultaneously: your vendor’s service, the actual tool and if SaaS really is a viable option for your company.