South Africa is the world leader in delivering core business applications via software as a service (SaaS).
This is the report-back from Richard Firth, CEO and chairman of MIP Holdings, who recently attended the third annual OnDemand Europe conference in Amsterdam.
Hosted by SIIA (Software and Information Industry Association), the conference focused on cloud computing in general and SaaS in particular, and featured a who's who of the IT industry, including Amazon, Fujitsu, Microsoft, Google, Progress Software, Mimecast, Salesforce.com, SAP and NetSuite.
"A pervasive theme of the conference was that only non-strategic applications are to be found in the cloud," says Firth. "Estimates for creating cloud-based core applications ranged from $30-million to more than $100-million, which was given as a key reason that software vendors have not yet taken their core applications to the cloud. Rather, the cloud was viewed as suitable only for fringe applications.
"Yet a number of South African vendors have been delivering their core business systems via SaaS for years already. This puts us years ahead of the rest of the world."
MIP is one of a number of companies which have overcome the inherent challenges of the South African business environment to design and deliver SaaS applications.
Among these challenges were:
* The cost and relatively low speed of bandwidth;
* The fluctuating exchange rate, which for many companies erects barriers to acquisition of internationally sourced software; and
* The current software model which confers all risk on a customer, which has to pay for software which is often not deployed or implemented successfully.
"A number of companies, among them MIP, have changed that model," says Firth. "We have worked with our software principal to make software licences payable on a monthly basis, rather than as one up-front lump payment. This allows a customer to smooth and predict its software costs, while taking them off balance sheet and making them an opex rather than capex cost, which is far easier to justify.
"Secondly, while all applications are browser-based, there is no fixation with delivering applications from the cloud. Applications are delivered in line with a customer's business model and can as easily be hosted on- or off-site.
"Vitally, the South African SaaS business model sees us share risk with our customers. We share development costs, and only start charging for the application once it has gone live. And our billing starts small, only growing as and when the customer's business grows with the assistance of the application.
"I was amazed to see that not one of the companies at the OnDemand conference had even begun to discuss risk-, or contingency-based billing."
Using this approach, South African software vendors have delivered some of the most business-critical mainstream applications to their customers, including insurance, pension, medical aid, treasury, lending and automotive dealer management systems.
"In total, these SaaS applications touch the lives of more than 7 million South Africans every month. They have won global awards, their business model is taught in universities and they have helped dozens of customer organisations to be more successful and profitable," says Firth. "And they have propelled us to the forefront of the world, as the OnDemand conference underscored."