Small business owners seeing rapid growth in their company soon come to a crossroads where they must look for appropriate business systems to enable effective management of an increasingly complex organisation.
When that time comes, says Immo Böhm, MD of Afresh Consulting, they need to consider which is the best technology configuration option for their enterprise resource planning (ERP) solution: owning their system outright, outsourcing some or all of it to a specialist provider, or looking into software as a service options.
“Unsurprisingly, perhaps, there are advantages and disadvantages to each configuration,” Böhm says. Owning outright costs more in terms of capital expenditure. It also has a higher overhead; users are on their own with administration, upgrades and maintenance.
“That’s why outsourced models have and continue to emerge strongly as a better option.” With outsourced configurations, reduced capital costs can result, while operational costs can also be lowered.
“Probably most important for the company which isn’t itself as technology business, is that there is a partner which can be relied upon for expertise and resources to keep everything running smoothly,” he adds.
SaaS – ideal for single-users
And, while software as a service (SaaS) models are emerging as a highly viable and very attractive option, especially in terms of pricing, Böhm says there are limitations.
“There can be little doubt of the validity of the SaaS model; the real issue which remains is the use case." It is apparent that most SaaS services are ideal for single-user purposes.
“That’s why SaaS is probably most often used in micro-enterprises. Typical services fulfil specific requirements very well; these requirements tend not to need much customisation and nor are they very complex,” he says.
Examples include invoicing services, basic CRM solutions, storage and file access services, and the like.
“Of course, these sorts of services can and are used within larger organisations, too – but they tend to be used by the individual in support of personal productivity, rather than as a ‘standardised’ solution procured and recommended by the IT department."
Why outsourced is best
Making no bones about it, Böhm says the outsourced, hosted solution is arguably the leading option for the growing small to medium business.
“Cost-consciousness is a feature of this market. Many such companies have unique business processes, so the necessity for customisation is often present. Some have quite sophisticated technology requirements. If these factors are realities for your company, and if you expect to continue growing, the best bet is very likely a hosted, outsourced solution.”
Such a system, he says, benefits from centralised management, security and control, with the necessary services delivered to the small to medium business over the Internet.
“Now this is distinct from SaaS as your system is your system; you pay for its presence and hosting, whereas with SaaS you pay per use of the software. That ownership provides a level of comfort, too, in that customisation is possible, while your data is ring-fenced, even if the system may share underlying hardware resources.”
Such a structure is enabled by the low bandwidth impact which is possible with purpose-designed solutions.
“A connection of just 16kbps is sufficient. And the centralised, hosted option really starts making sense when additional branches of a business are opened.”
That by no means precludes the use of SaaS services. “Just as within the large corporate, there may be a need or a desire to use an online service to meet the needs of an individual user or some sort of project, there is the flexibility to include that as required.”
He strongly advises doing some in-depth digging to understand the models and their implications in terms of cost, convenience and performance.
“There are no absolutes; your business is different from that of others. Finding the structure which is ideal for you should therefore be an informed decision which produces the results you are most comfortable with,” he concludes.