The Department of Land Affairs has become the first organisation in South Africa to deploy a software as a service (SaaS) delivery model, in which a third party hosts the actual technology infrastructure and services for mission-critical business software applications.
The department recently deployed a brand new state land leasing debtor system using Microsoft's Dynamics NAV, an enterprise resource planning (ERP) solution that automates and streamlines business processes. The new system replaced the department's manual system of multiple Excel spreadsheets and an Access database, leading to almost immediate efficiencies and cost savings.
The deployment is noteworthy in that the department is renting the use of the software on a per user, per month basis – which is a true SaaS model, as opposed to a traditional legacy outsourcing approach. The entire financial solution is being provided by solutions provider Malachite Business Solutions.
Malachite's Alison Meijer says the installation signals a steady change in traditional business IT models as customers realize the flexibility that the SaaS model gives them in the way they source, deploy and use business software.
Industry analysts anticipate steady growth in the sector during the next few years. For instance, market researcher Gartner predicts that 25% of new business software will be delivered as SaaS by 2011.
The Department of Land Affairs has offices in all nine provinces, often in some of South Africa's remotest areas. Once connected to the internet, each office now has access to the portal through which it can administer monies collected on government's behalf.
"That's where the Internet-based model helps, because we did not have to worry about hardware procurement and installation, software licenses, backups and related management and other application related fees ," says Chris Schalkwyk, director at the Department. "The fact that we could do it quickly won over a lot of sceptics, because, traditionally, systems take a while to put in."
SaaS is a change in mind-set, and it comes down to the cost-benefit analysis, says Schalkwyk: "I don't really have a great desire to own and manage computer infrastructure, software licenses and maintenance; I'd rather focus on my core business."
Microsoft SA's Dynamics lead, Jumana Helal, says the installation is an important milestone for Microsoft, which has said the future of IT services lies in a "software plus services" strategy. This marks a strong shift in the way Microsoft addresses its marketplace.
"The Department of Land Affairs is leading the way in showing that this kind of procurement model can work," says Helal. "What is interesting about this model is that the department is taking a service that is widely available and that lots of people use, and just paying for its incremental usage. This is a completely logical thing for them to want to do, and we expect to see a lot more government departments following suit."
Depending on their specific business and IT needs, SaaS customers can deploy business applications either as a traditional on-premise solution, a web-based on-demand solution, or as a flexible mix of on-premise software and on-demand services.
The company is also providing more choices in how solutions are purchased, with options for upfront licensing, pay-as-you-go or financing. The strategy puts the customer in ultimate control of how they want to implement software solutions in their businesses.
"SaaS is ideal for organisations that have more than one physical location and want to ensure their IT services and technical support are up and running 24×7, but would like to avoid the expense associated with managing and supporting an owned solution, preferring to focus on their core competencies.
"Most importantly, though, they want the choice of being able to buy IT as they do other office utilities, like water and power, with a fixed monthly price tag and contract, making the budgeting of IT possible for years to come," says Meijer.