By Rebecca Gill
While the Software as a Service model has rapidly grown in popularity, by all measures it is far from common place in existing user adoption. The percentage of companies moving to this model is growing quickly, yet despite the positive aspects of a SaaS model, many companies still question if a Software as a Service model is the right option for their organization.
Analysts and researchers have flooded the media with surveys and studies about the public’s general perception of SaaS models and a company’s willingness to deploy this type of software for their own internal use. While more and more companies are considering this on-demand model as a viable option for business software, it is not fail proof, nor is it the ultimate solution for every organization.
What is Software as a Service?
Short for Software as a Service, SaaS is a software delivery method that provides access to software and its functions remotely as a Web-based service. Typically, these software packages are hosted by the software vendor or a third party vendor. Users of the business software access the SaaS-based system through what is commonly referred to as an on-demand service offering.
A Software as a Service offering typically includes the following:
Application software licenses and annual maintenance
Computer server usage
Secure data center
Redundant power supply
Redundant air conditioning
Redundant network connections
Data storage and disk space capacity
Server management, monitoring, and maintenance
Network management, monitoring, and availability
Data backup and optional recovery assistance
Help desk availability
While not every SaaS provider will offer the same software functionality, the general service model will be fairly consistent. Most Software as a Service applications are sold through monthly, per user subscription fees that are based on contract durations of one to three years. The monthly subscription fees include maintenance and upgrades and frequently offer some level of technical support. Fees typically range from $50 to $200 per user per month with the actual user count calculated based on named or concurrent user. Some software vendors will provide discounts for high volume, longer contract durations, or for paying for the entire contract at signing.
Why Should a Company Consider SaaS Based ERP Solution?
More and more small and midsize companies are adopting the Software as a Service model because it provides the enterprise wide functionality of ERP software, yet eliminates the need for any capital investment in servers, software licenses, or backup facilities. This methodology also significantly reduces the need for on-site technical staff, making it a very good option for small businesses or start-up companies with little or no in-house resources.
This approach to ERP software acquisition and operation is a very good alternative to buying, staging, testing, and maintaining ERP or accounting software in-house. It allows a company to purchase only what is needed in a convenient monthly payment. In addition to accessing the latest offerings in ERP or accounting software, the organization’s data is hosted in a secure data center that generally utilizes redundant power supplies, air conditioning, and network connections. Most facilities are monitored 24/7 to ensure maximum network and server availability. This type of protection and support is very difficult, if not impossible for smaller businesses to obtain otherwise.
This model offers a number of benefits to organizations that cannot be ignored, even by the biggest SaaS skeptics.
Benefits of a Software as a Service model include:
Access to the software application and user data from anywhere and at anytime
Highly functional software at a low cost point
More predictable ongoing costs
Rapid in-house implementation and deployment
Minimal or no requirement for in-house IT skills
Shared or limited responsibility for infrastructure
Nearly 100% uptime for application software and data access
While SaaS accounting and ERP software is suitable for most small to medium size businesses, it is especially attractive to start-up companies or small business migrating from QuickBooks or Peachtree. Companies who find themselves outgrowing QuickBooks for example, struggle with moving from an entry level software package to a full ERP solution. This on-demand approach allows these organizations to quickly reap the benefits of the more advanced ERP software packages, without the worry for infrastructure and technical support. It makes the move from QuickBooks to ERP software much more easy to obtain and much more cost effective.
What Vendors Offer Software as a Service?
For some time now, the IT community was familiar with such on-demand packages as Salesforce.com and could easily tell you this package existed. If you asked an executive what ERP and accounting packages were available in a SaaS type model, the response would be much less consistent. This confusion is clearing up quickly as more vendors emerge as players in the Software as a Service market and as more and more analyst cover this rapidly growing business model.
While well known vendors such as NetSuite and Workday continue to grow their SaaS customer list, more and more traditional ERP vendors add an on-demand option to their existing offering. Aplicor, Everest Software, Glovia, Intacct, Intuit, and Plexus, Sage, Technology Group International all offer SaaS products. And while the list of potential on-demand ERP vendors grows, there remains a few big ERP players like SAP and Microsoft that appear not as eager to jump onto that list of providers.
Software as a Service Will Continue to Mature
The recent advancements in SaaS applications are as much a result of demand as the IT community’s own maturity. Users are seeking out this solution set and adopting cloud computing more and more each day. Vendors are learning more about how to make this model a success and dedicating the resources necessary to make this model work in real world environments.
Regardless of your own personal views on SaaS applications, the term and technology model is not going away. Virtually every well known publication and analyst is discussing the pros and cons of SaaS software packages. With seventy-three percent of respondents considering SaaS applications, it is certainly a movement in itself that is moving closer and closer to mainstream each day.