Learn the benefits of a utility based software model such as Software-as-a-Service (SaaS). Find out why SMEs are ideally positioned to benefit from SaaS.
A new innovation is here that promises to help companies, especially the small and medium enterprises (SMEs) save money in the ICT (information communication technology) space. The Software-as-a-Service (SaaS) technology allows you to have a suite of software services, applications and programmes provided to stakeholders, such as customers across the Internet.
This on-tap access eliminates the need for business owners and SMEs to install and run the application on your own computer, alleviating the burden of software maintenance, ongoing operation and support.
Conversely, customers relinquish control over software versions or changing requirements. Moreover, costs in using the service become a continuous expense, rather than a single expense at the time of purchase.
Conceivably, SaaS reduces the upfront expense of software purchases, through a less costly, ondemand pricing. From a software vendor standpoint, SaaS has the attraction of providing stronger protection of its intellectual property while establishing an ongoing revenue stream.
The SaaS software vendor may host the application on its own Web server, or this function may be handled by a third-party application service provider (ASP). This way, end users may reduce the investment on their server hardware too.
The services are delivered on-tap, as and when you need it. As you would pay for utilities like water, gas and electricity, similarly you pay for the programmes when you need - only in this instance, you pay for the software you use and the services you deploy.
Here are some key benefits of SaaS:
- No installation required. Simply open your browser, log in and start work;
- Runs on any Internet-connected computer platform (Linux, Unix, Mac or Windows);
- Free software upgrades and bug fixes - you always get the latest version of the software;
- You get to access all your data/applications anytime and anywhere;
- No necessity to hire or train infocomm staff to maintain the applications and programmes; and
- Low-cost but high-value solutions as a paid or leased service to businesses.
Which SMEs will gain most?
Early adopters of SaaS tend to be companies that need a huge amount of computing or storage capacity. They include computer animation studios, advertising agencies, design-based firms like architecture, video and film production, editing or processing agencies as well as companies in scientific R&D and modelling. As SaaS presents diverse opportunities for specific sectors, it is sufficiently versatile to cater to the breadth of needs and services of any company.
SMEs in particular are ideally positioned to benefit from SaaS. That is because some SMEs do not have the resources to invest in high-end computing power that may be needed for a short-term project.
According to studies by New York-based Access Markets International (AMI) Partners, Inc, SMEs can save between 40 and 75 per cent of their overall project budgets by opting for SaaS. Aside from the immediate cost savings, SMEs do not have to worry about software management or upgrades, troubleshooting, security and other common concerns that typically arise when a company owns all the hardware and software.
For example, as the healthcare sector in Singapore gradually transforms itself with the use of infocomm to provide better and safer care for patients and citizens, the General Practitioner (GP) clinics are gradually adopting SaaS to run their clinics. Over the past two years, some 400 GP clinics have subscribed to the Web-based Clinic Management Systems (CMS).
By subscribing to these systems, GPs not only get an affordable Internet deal but also have access to a fully operational CMS online, anytime and anywhere. With this, GPs can turn their focus on patientcare without having to grapple with technology or worry about secure and reliable storage of patient information that grows over time.
Why is SaaS important to the SMEs in Singapore? The latest study by AMI Partners shows that the SMEs are set to spend over US$4 million on hosted applications and SaaS in 2008, up 23 per cent over 2007. These companies would be able to compete more aggressively because of the better services they can offer with the use of SaaS.
What should SMEs do?
Improve your understanding of the concept and how it works and then you can help generate a greater awareness of the benefits of SaaS to your industry. By attending seminars and reading about SaaS online or in print, business owners and managers can familiarise themselves with this latest technology and how it can have a positive impact on their business.
Talk to the SaaS providers as well. They play a major role in educating you on critical issues such as data security, downtime management, costs versus benefits, data ownership and data migration issues.
You would do well by working with a SaaS vendor that focuses on the customer value proposition. A solution that is customisable to your specific needs and delivered in a securely hosted environment would go a long way. A good practice is to start with smaller and manageable pilot projects.
As your confidence increases with each successful project, you can opt to do bigger SaaS projects, involving applications on sales-ordering, contact-management, leave-management, inventorychecking and/or online information access.
With SaaS, your business can increase its mobility and competitiveness as well as save your resources like time and money. By tapping SaaS you can concentrate on your core business activities and customer-focused processes with less hassle of system administration and infocomm management issues.
- The writer, from AMI Partners Pte Ltd, is also a member of the National Grid Advisory Council.
- This article first appeared in The Business Times on 14 October 2008 and information is correct at the time of publication.
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