Understand the growing trend that will allow SMEs to access software, hardware, storage and other infocomm services easily on a utility basis.
Traditionally, businesses acquire customised off-the-shelf infocomm solutions for their own business. As technology evolves, they become even more infocomm-savvy and are better informed of the tools that can help streamline their operations. This can translate into a competitive advantage such as timeliness in replenishing goods through the implementation of a point-of-sales system.
Businesses see the value of investing in higher-end infocomm systems, propelling solution providers to develop more sophisticated infocomm products and services to suit the needs of various businesses. In addition, more packaged solutions are now immediately available. So today, businesses can implement infocomm solutions much faster and much cheaper.
As the demand for customised and cost-effective solutions grow, so too will the evolution towards a software-as-a-service (SaaS) usage model. SaaS allows business owners to pay as they use the different software applications available 'on tap'. The application is deployed, hosted and managed remotely by the company that develops and sells the application. It is then accessed over the Internet and used as a shared service by business users. There is neither a need for an installation kit nor instruction manual to access the SaaS application. To use the application, all you need is a Web browser such as the Internet Explorer or Firefox. Both browsers are free and run on a basic personal computer with Internet access. You can access it anytime and anywhere. One good SaaS example is salesforce.com which offers customer relationship management (CRM) solutions.
SaaS applications are periodically updated and their activities are transparent to subscribers. You can benefit from the improved software as the new versions are being released. You may not even need to maintain any infocomm personnel with this model, as the software rental service may come with a helpdesk service. You will also find it easier to replace the software if it is found to be insufficient in meeting your needs as compared to the practice of investing in customised hardware and software traditionally.
With technological advances, you will be happy to know that SaaS can be delivered through leveraging on grid technology. This means that high computing power and large storage are now available on tap for users.
Grid technology harnesses the computing capacities from a number of computers, enabling these computing resources and databases to be shared flexibly among many users. Google and amazon.com, among others, are providing platforms of computing resources as a service with this technology. Businesses with large storage needs, such as digital media firms, professional design firms in the construction or mechanical engineering sectors only need to pay for these capabilities as and when they require them. This works out to be cheaper than developing the capability for the highest storage and computing power.
With the use of SaaS applications delivered using grid technology, you need not employ any additional infocomm personnel, avoiding the high upfront capital cost of implementing such computing or intensive storage applications. Ultimately, this reduces the overall cost of using the new application.
Still, some business owners prefer to own key infocomm systems and are not comfortable with the perceived loss of control from renting software. The more financially astute businessmen may also like the ownership model for accounting reasons. They would rather have more control over how their infocomm assets depreciate rather than incur expenses from the rental of software. Coupled with the lack of knowledge on the capabilities of the SaaS offerings, some businesses may not see the benefits of switching to the SaaS model.
However, implementation of the SaaS model is starting to boom in SME sectors in the United States. A study by Access Markets International Partners (AMI) showed that SMEs spend more than US$1 billion on their hosted/SaaS CRM and Enterprise Resource Planning (ERP) in 2006, accounting for half of the US$2 billion global investment in hosted software.
Locally, there are some early adopters of the SaaS model. Goh Joo Hin Pte Ltd, a leading marketing and distribution company for brands such as New Moon, has been using the human resource SaaS applications from JustLogin since 2006. It allows the company to automatically track all its leave records without additional manpower investment.
Another excellent example is the local voluntary food distribution organisation - Food From The Heart (FFTH). FFTH uses the solution from salesforce.com to manage its 3,000 volunteers, 11,000 individual beneficiaries and over 1,500 food missions every week. Henry Laimer, the founder of FFTH, commented that with the solution from salesforce.com, they moved away from managing disparate spreadsheets to consolidating databases and timely reporting, simplifying their management and operations. It is amazing that the entire logistics operation is managed by nine permanent staff, without an infocomm team.
The success at the two organisations has proven the feasibility of SaaS and that size is not a hindrance to adopting this technology. This trend will continue to grow in Singapore as well as elsewhere in the world. In June this year, after a Call-For-Collaboration, the Infocomm Development Authority of Singapore (IDA) awarded three grid consortia, led by Singapore Computer Systems, PTC System and NewMedia Express respectively, to provide hardware, software and storage services on a pay-per-use basis.
These National Grid service providers are expected to offer commercial services as early as November. These services include business tools such as enterprise resource planning, supply chain management and customer relationship management modules. Businesses, especially SMEs, can therefore use such commercial grid services to enjoy cost-savings, better utilisation of IT resources and increased competitiveness.
Under the Intelligent Nation (iN2015) infocomm masterplan, an Infocomm Resource Marketplace is envisioned whereby businesses, large and small, will be able to share, buy and sell infocomm resources such as software, computing, and storage.
This platform enables businesses to offer more innovative services using new business models.
To this end, the Infocomm Development Authority of Singapore has for a start, supported the establishment of commercial grid service providers as well as the Software-as-a-Service (SaaS) incubation centres.
Small-and medium-sized enterprises (SMEs) will be able to access software, hardware, storage and other infocomm services on a utility basis.
The users pay for what they consume, without hefty upfront investment in software and hardware. Such an approach is expected to make the adoption of infocomm by SMEs more affordable.
With the reduction of equipment such as hardware, the demand for in-house infocomm capability is also minimised, freeing the SMEs to focus on their core business.
- This article is contributed by Robert Chew, chairman of the sub-committee for SMEs, National Grid Advisory Council.
- This article first appeared in The Business Times on 23 September 2008 and information is correct at the time of publication.
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