Software-as-a-Service

The benefits for you, and reasons why you shouldn't wait...

[Extract from an article by Jeffrey Kaplan - the managing director of THINKstrategies (www.thinkstrategies.com), a strategic consulting company based in Wellesley, Mass.]

For years, organizations of all sizes have suffered the hassles and unexpected costs that accompany deploying and maintaining a variety of traditional software applications that, ironically, were intended to make them more productive.

Times have changed. Today's economic and competitive pressures make nearly any form of outsourcing fair game. Many companies now consider various IT functions and business applications commodities and not core competencies. This has made SaaS, essentially an outsourced application management business, more attractive today than ASPs and hosting services of the past.

Now a new breed of Web-based services are pushing legacy applications aside and finally giving users the business benefits they've been seeking.

This new form of software-as-a-service, or SaaS, has been spearheaded by Salesforce.com's (CRM) customer relationship management and salesforce automation applications.

These spearheading companies have recognized the inherent inefficiencies of the traditional software market, including the tremendous time, effort, and cost that organizations have to expend to install applications and keep them up and running.

SaaS not only alleviates the costs of traditional perpetual licensing fees but also eliminates the need for additional IT infrastructure investments to support new applications.

Companies of all sizes are taking advantage of SaaS. The scalability of the new generation of SaaS solutions enables users to test the reliability and performance of on-demand applications in limited deployments, and expand their adoption incrementally.

Many SaaS vendors have emulated Salesforce.com's market penetration strategy of appealing to individual users with free trials or low-cost single-user subscription fees with the intent of permeating the market, and then winning business unit and enterprise-level adoption in major corporations.

While SaaS certainly makes sense for many front-office functions and team-oriented collaboration purposes, SaaS solutions are emerging to address nearly every business application need. These range from accounting and financial applications to supply chain and channel management solutions.

A third of the respondents to THINKstrategies' recent survey said they are already using SaaS, and another third said they are planning to adopt SaaS in 2006. Other research firms have generated even higher ratios.

As SaaS gains mainstream acceptance, it is becoming an important disruptive force in the software industry. And as long as the quality and reliability of SaaS solutions continues to improve, the appeal of SaaS isn't going to go away.