Software As a Service (SaaS) It Adds Up!

By Langedijk, Martin

We all have been taught by our parents from a young age that sharing is a good thing! Software as a Service (SaaS) is based on the principle of sharing; in this case the sharing of resources, computer hardware, knowledge and most importantly the sharing of cost.

Software as a Service, on demand applications or the more popular ‘software on tap’ all refer to web-based software applications where the underlying hardware and software components are shared by all users of the application. The hardware that is used to run the software is not located at the customer’s premises but in datacentres and is managed by the provider of the service. Users gain access to the software interface through an internet browser. No software has to be installed on the user’s computer nor will they need to worry about upgrades of the software or backups of the data that is saved.

SaaS in practice

How online collaboration will change the dynamics of the relationship with your client and your software vendor

Where SaaS type solutions have been most successful is in business processes where a lot of information is exchanged between multiple parties. Think about project management (www.projectplace.com), CRM (www.salesforce.com and www.opencrm.co.uk), supply chain management (www.e-buzz.nl), direct debit processing (www.sentenial.ie), event management (www.eventznet.ie) and, yes, also accounting (www.twinfield.ie). The reason for the success of these solutions is that these web based platforms allow multiple parties to exchange real-time information in a structured way.

Accountants in practice face the daily challenge of exchanging data with their clients. But the real issue is the timeliness of information. Web based accounting solutions allow you to have real- time access to your clients’ bookkeeping data. More importantly your role will become a lot more pro-active, you will have more regular client contacts and the dynamics between you and your client will change. You can spend less time adding up the numbers, and more time analysing them to provide advice and real added value.

The one-to-many model of SaaS also changes the dynamics between customers and software vendors (providers). If the service is any way unreliable it will immediately affect all users of the service. It forces the provider to continually offer a high quality service, which is built on the best possible hardware and software infrastructure to minimise the risk of service outages. Compared to the traditional software company, the SaaS provider has to earn their money every day.

You only pay for the slice that you eat!

The one-to-many model also changes the way software is charged for. In place of an upfront license fee, the cost of the service, upgrades, backups and support are all included in a periodic fee. The fee is generally based on the number of users, data traffic, data storage, functionality level or a combination of these 4 parameters – a pricing method that makes sense, is fair and ultimately leads to significant cost savings compared to traditional software delivery.

Many businesses already use SaaS

So if businesses can save a lot of money why is every business not using SaaS type solutions today?

The fact is that many businesses already have a SaaS solution in place, namely Internet banking. You may not perceive your bank as an innovative and cost saving software provider but without a doubt the uptake of Internet banking has been very high.

So why have we not yet seen the same level of uptake of other SaaS business applications in Ireland?

Firstly broadband availability and uptake has been far slower than amongst our European neighbours.

While a dial-up connection can work for SaaS applications where the number of transactions is low, with most business applications there is a lot more data processing and a broadband speed level is a requirement.

However, the main reason for SaaS slow uptake is that most software buyers are unaware of such an alternative. Most SaaS business application providers are not based in Ireland and they initially developed their home markets first.

Let’s take Salesforce.com as an example. Salesforce.com is considered the big SaaS success story that is well able to compete with enterprise systems like Siebel or Oracle. This web based CRM application is now available in 12 languages and is used by more than 399,000 users in 20,500 companies. Salesforce.com user growth is estimated to be 80% for the coming year. Their sales are driven by free publicity and word of mouth within the Internet community, and yet it is a relatively unknown player in the Irish public domain compared to, for example, Sage CRM.

SaaS providers have to earn your trust

A SaaS provider has to prove that they are a reliable and credible supplier since entrusting your confidential data to a ‘new’ supplier where the data is not actually stored on your premises is, for many, a big step to take. Banks had no problem selling their Internet banking because they were already established as a credible ‘supplier’.

If you look at this rationally you may come to the conclusion that your sensitive data is probably safer being stored with a SaaS provider than at your own premises. Providers have invested heavily in their equipment and security measures to keep data available, secure and confidential. Their equipment is kept in very secure data- centres where every contingency is considered. What happens if there is a fire in your office today? Will you be able to continue working with the latest software and data tomorrow?

Conclusion

Software as a service has put itself on the map and has proven itself to be a viable alternative to traditional software delivery. SaaS solutions will become commonplace in coming years and more services will become widely available that not only cover front office but also back office processes. We will also see convergence of different SaaS services that complement each other. Data can be exchanged in real-time and for the users it feels as if they are working with one application. The cost savings and the ease of exchanging information between parties will make SaaS solutions a strong contender on the software shortlist.

Software-as-a-service is here to stay, but it has evolved in a more organic way than was predicted by the early evangelists of the ASP model. We are getting near the point where software buyers will routinely tick a box to say if they want to install products on their own computers or to log onto them through the internet.

Sofware Focus, Enterprise Ireland, 15 Dec. 2005.

SaaS is an evolution from the old ASP model that emerged and then fizzled in the mid to late 1990s. Although SaaS appears similar to ASP, it differs in that the Independent Software Vendor (ISV) is now providing their own application as a service, rather than depending on a third party to aggregate a selection of applications for sale and availability … The new SaaS model is poised to undergo rapid growth and to play a very meaningful role in redefining the software industry.

Nick Blozan, Senior Vice President, OpSource

Dating goes mobile!

AnotherFriend.com, the online dating site, has launched a Mobile Dating Service for its members.

AnotherFriend.corn’s Mobile Dating Service allows members to post a personal profile with a picture, search and view other profiles, plus flirt, chat and email people they like; all over a simple user interface on their mobiles.

According to Grainne Barry, business development manager with AnotherFriend.com, the ability to access fellow members on the fly is very attractive for today’s romance seeking members.

Financial Engineering Network (FEN) goes mobile with Abacus

Financial Engineering Network(FEN) has implemented a mobile teleworker solution for its growing network of people and offices. Abacus Networks advised on the specification and installed the hardware and software solutions to make this possible. The return on investment (ROI) is expected to be achieved within 6 to 8 months. Last year, Abacus was instrumental in providing the technical advice, equipment and software strategies in installing FEN’s network infrastructure across its new headquarters as well as in the newly opened regional offices.

IFS uses visual communications between Irish and US offices Diacom provides leading edge technology

International Fund Services (IFS), part of the US banking group State Street, is using visual communications to communicate between its Irish offices and the US. The hedge fund administration company now uses the visual communications technology on a near daily basis. Diacom was responsible for the installation and ongoing support of the TANDBERG visual communication units in the two offices in Dublin as well as the Drogheda and Naas offices. Visual communications allow employees to talk face-to-face across the Irish offices or with their US counterparts.

Note

* For a comprehensive list of SaaS providers please visit www.saas-showplace.com

Martin Langedijk is Managing Director Twinfield Ireland. Email: mlangedijk@twinfield.com

Copyright Institute of Chartered Accountants In Ireland Jun 2006

(c) 2006 Accountancy Ireland. Provided by ProQuest Information and Learning. All rights Reserved.