Remaining nimble and flexible is key to success for small and medium enterprises. The leaders of small and medium enterprises are under constant pressure to continuously deliver operational and financial improvements. The need to constantly improve, grow, compete and ensure compliance with constrained resources (i.e. time, money, staff, technology) is compelling the leaders of small and medium enterprise to explore technologies that will help them adapt and adjust quickly to rapidly evolving business and market conditions. Consequently software-as-a-service (SaaS), given its rapid deployment and instant consumption model, is gaining increasing prominence with the leaders of small and medium enterprises for improving business operations. Actually within industry circles, SaaS is increasingly becoming known as the scalable business resources without requiring any of the capital expenditure that is associated with traditional on-premise software.
The business value that small and medium enterprises can derive from a SaaS solution is highlighted below:
Time to Value: SaaS offers rapid deployment/quick implementation; thereby, greatly engendering instant consumption. Rather than the lengthy implementation cycles (i.e. sometimes as long as 6-12 months) that is synonymous with traditional “on-premise” software, SaaS solutions can be deployed and adapted to fit specific business needs within a matter of weeks. Shorter implementation cycles leads to a shorter payback period, which results in quicker return on investment.
Affordability: SaaS solutions are usually acquired, utilized and paid for on a monthly basis or on a per transaction basis. Therefore, SaaS solutions pose less of a financial hurdle as compared to traditional “on-premise” software. Companies no longer have to incur outlay of large capital expenditures for purchasing software which is the norm when acquiring traditional software. Given the subscription nature of SaaS solution, small medium enterprise can make more judicious use of their limited capital budgets by investing in core business areas to drive growth.
Continuous Innovation: Consumers of SaaS solutions benefit from the frequent software upgrades delivered by the vendor of SaaS solutions; thereby gaining exposure to the latest software capabilities on a regular basis. Given the multi-tenant nature of SaaS solutions (i.e. shared infrastructure, single code base across tenants), any new enhancement delivered by the vendor becomes instantly becomes available to all tenants. Tenants no longer have to worry about paying for annual maintenance upgrades. Also the onus of ensuring that the upgrades are delivered in a non-intrusive and non-disruptive manner falls on the SaaS vendors; hence, the users of the SaaS solution do not need to be concerned whether the upgrades will cause any break in the existing software.
Customizations: The providers of SaaS solutions have made it relatively easy for the business users to be able to customize SaaS supplications via simple drag and drop operations. Business users no longer have to depend on or wait for IT resources to customize the look and feel of applications. Furthermore, business users who are subject matter experts within their respective domains can now quickly adapt business processes through simple, intuitive and easy-to-use wizard laden interfaces. No programming expertise is required to customize/modify SaaS solutions. SaaS has actually democratized enterprise applications by making it more business user friendly; thereby, significantly reducing over reliance on IT resources.
Integrations: By adopting open and flexible service oriented frameworks, SaaS providers have ensured that orchestration of business processes between “on-premise” systems and “on-demand” SaaS solutions can be easily facilitated via Web Services technology. In addition, there are other options currently available that foster seamless integration between “on-premise” and “in the cloud” systems. The first of these options is Web-based SaaS integrators which enables “point and click” connectivity between “on-premise” and “in the cloud” systems for a monthly subscription fee. No install of any software packages or hardware is required in this case. The second of these options, SaaS integration appliances, allow users to establish connectivity between “on-premise” and “in the cloud” systems through simple configuration options (without any coding) by utilizing pre-configured/pre-built templates. Finally, the third of these options, SaaS Systems Integrators actually specialize in enabling complex integrations between SaaS and “on-premise” systems. Given the afore-mentioned choices, the SaaS integration challenge seems to have been fully addressed.
Fewer Technical Resources: Since the SaaS solution provider is responsible for managing the software and ensuring delivery of the service, the consumers of the service no longer have to rely on large teams of in-house IT resources for maintaining, upgrading and modifying the software. Consequently, fewer technical resources are required since the users of the SaaS solution can now access state-of-the-art technologies and cutting edge solutions through the SaaS solution provider. This is an enormous advantage for small and medium businesses since they can now allocate their limited capital budgets to strategic initiatives that drive growth in their core business focus areas.
In summary, SaaS enables smaller and mid-sized firms to manage growth, regulatory compliance and competition without also dealing with a variety of challenges relating to information technology. SaaS is more easily affordable, immediate in its impact, and provides modular functionality in a way that is easy to extend and change, and easy to integrate with other systems.
Monday, September 6, 2010
Sunday, May 16, 2010
Evaluating the TCO of SaaS
SaaS vendors claim that the key drivers to SaaS adoption are lower TCO, rapid deployment and reduced IT operations and support costs. However companies need to make a conscientious effort to measure the value provided by SaaS from a TCO perspective. Therefore, on the one hand companies need to constantly monitor the TCO of a SaaS solution, while on the other hand companies need to ensure that the capabilities served by the SaaS provider continues to meet their business needs within the context of a rapidly evolving business climate i.e. features, capabilities and performance provided by the SaaS vendor is in line with business expectations.
Measuring the TCO
The low acquisition cost of a SaaS solution is appealing; however, customers should evaluate the TCO every 12 to 24 months to verify that the SaaS solution does in fact continue to offer a lower TCO as covered to investing in an on-premise version of the application/solution. While measuring the TCO, consider the impact of the following items on the total cost of ownership.
More Users: The impact on the TCO as more users from within a company adopt the SaaS solution. Furthermore as more users adopt the solution, more storage is required which translates to additional storage costs. Moreover additional data storage costs may lead to additional back-up costs as well.
More features/functions: Is there an additional cost associated with getting access to new features/functionality? A lot of vendors provide the basic functionality out of the box; however, in order to gain access to advanced features may result in additional expenses.
Provisioning: How easy is it to provision new users, change existing workflow rules? Since SaaS solutions are more often than not geared towards the business user, a business user or group of users are usually tasked with the responsibility of provisioning accounts for new users or modifying/updating the workflow rules. Do adding new users or changing workflow rules take an in-ordinate amount of time; thereby, taking away precious time from the business user(s) that could have been utilized towards accomplishing more business-critical tasks/objectives.
Data Portability: How easy is it to move data to and from the SaaS application? The SaaS vendor may charge extra for moving data in and out of the application. If the SaaS vendor is not equipped with the necessary data migration tools, then companies may have to invest in tools that extract, validate, repair and transform data which could result in a higher TCO.
Integration: Does the SaaS provider offer the necessary integration capabilities to exchange information with other disparate SaaS solutions or on-premise systems? Nowadays companies try to differentiate themselves via the uniqueness and efficacy of their business processes. More often than not, these business processes traverse multiple applications i.e. a process may originate in an on-premise application and then get routed to a SaaS application for the execution and completion of a specific task. Therefore, information exchange between non-SaaS <-> SaaS applications and amongst disparate SaaS applications is becoming increasingly important. If the consumer of a SaaS application has to engage with third-party cloud data brokers to facilitate the information exchange, then it would have an impact on the TCO.
Customization: How easy is it to customize the SaaS solution? If the consumer of the SaaS application has to depend on a services engagement to customize the application, then the additional costs incurred as part of a services engagement will have a negative impact on the TCO.
Highlighted above are some items companies must consider while evaluating the TCO of a SaaS application.
Measuring the TCO
The low acquisition cost of a SaaS solution is appealing; however, customers should evaluate the TCO every 12 to 24 months to verify that the SaaS solution does in fact continue to offer a lower TCO as covered to investing in an on-premise version of the application/solution. While measuring the TCO, consider the impact of the following items on the total cost of ownership.
More Users: The impact on the TCO as more users from within a company adopt the SaaS solution. Furthermore as more users adopt the solution, more storage is required which translates to additional storage costs. Moreover additional data storage costs may lead to additional back-up costs as well.
More features/functions: Is there an additional cost associated with getting access to new features/functionality? A lot of vendors provide the basic functionality out of the box; however, in order to gain access to advanced features may result in additional expenses.
Provisioning: How easy is it to provision new users, change existing workflow rules? Since SaaS solutions are more often than not geared towards the business user, a business user or group of users are usually tasked with the responsibility of provisioning accounts for new users or modifying/updating the workflow rules. Do adding new users or changing workflow rules take an in-ordinate amount of time; thereby, taking away precious time from the business user(s) that could have been utilized towards accomplishing more business-critical tasks/objectives.
Data Portability: How easy is it to move data to and from the SaaS application? The SaaS vendor may charge extra for moving data in and out of the application. If the SaaS vendor is not equipped with the necessary data migration tools, then companies may have to invest in tools that extract, validate, repair and transform data which could result in a higher TCO.
Integration: Does the SaaS provider offer the necessary integration capabilities to exchange information with other disparate SaaS solutions or on-premise systems? Nowadays companies try to differentiate themselves via the uniqueness and efficacy of their business processes. More often than not, these business processes traverse multiple applications i.e. a process may originate in an on-premise application and then get routed to a SaaS application for the execution and completion of a specific task. Therefore, information exchange between non-SaaS <-> SaaS applications and amongst disparate SaaS applications is becoming increasingly important. If the consumer of a SaaS application has to engage with third-party cloud data brokers to facilitate the information exchange, then it would have an impact on the TCO.
Customization: How easy is it to customize the SaaS solution? If the consumer of the SaaS application has to depend on a services engagement to customize the application, then the additional costs incurred as part of a services engagement will have a negative impact on the TCO.
Highlighted above are some items companies must consider while evaluating the TCO of a SaaS application.
Saturday, May 1, 2010
The "Tuned-In" Process
Towards the end of April, I read an interesting book titled "Tuned In". The book details a six step process that could be utilized to create break-through product or service experiences that truly reasonates with the user base. Being a Product Manager over the last few years in a high tech firm , the six step process outlined in the book seems very intuitive; however, many companies focus solely on innovation without much regard to whether the innovation really addresses an unresolved business problem. Instead of purely focusing on innovation, companies must concentrate on innovations that reasonate by adopting an "outward-in" approach to any new product or service development initiative.
Another powerful message cited in the book resolves around the notion of listening to customers. Yes, listening to customers is vital; however, true break-through disruptive innovations can only happen by "tuning-in" to prospective/potential customers. This is a truly eye-opening concept. In the book, a break-through disruptive innovation is categoried as something that addresses an unresolved business pain point, a pain point that afflicts a large number of people/organizations.
Why is this an "eye opening" concept? Reason: Listening to existing customers will only lead to small incremental enhancements to your product or service. The existing customer base has already adopted the product and service and in most cases will demand new features/functions that augment the existing functionality leading to small improvements in the product or service over time. But, break-through innovations can mostly be achieved by focusing on prospective/potential users to understand/determine how the product or service can be adapted to address an unresolved business need. Taking an "outward-in" approach towards new product or service design and focussing on different buyer personas within the potential user base will lead to the creation of solutions that provides a cure/panacea for an unsolved business need and as a result the solution will be sought after by a large proportion of the intended user population. By providing a much needed solution to a business problem, the disruptive innovation creates a "win-win" for both the user as well as the vendor. The user benefits since now they have a much needed solution to a problem; whereas, the vendor benefits due to a much bigger revenue opportunity (in any business, the potential/prospective user base usually constitutes the largest portion of the revenue opportunity) and increased customer satisfaction (a key to foster viral adoption).
Another powerful message cited in the book resolves around the notion of listening to customers. Yes, listening to customers is vital; however, true break-through disruptive innovations can only happen by "tuning-in" to prospective/potential customers. This is a truly eye-opening concept. In the book, a break-through disruptive innovation is categoried as something that addresses an unresolved business pain point, a pain point that afflicts a large number of people/organizations.
Why is this an "eye opening" concept? Reason: Listening to existing customers will only lead to small incremental enhancements to your product or service. The existing customer base has already adopted the product and service and in most cases will demand new features/functions that augment the existing functionality leading to small improvements in the product or service over time. But, break-through innovations can mostly be achieved by focusing on prospective/potential users to understand/determine how the product or service can be adapted to address an unresolved business need. Taking an "outward-in" approach towards new product or service design and focussing on different buyer personas within the potential user base will lead to the creation of solutions that provides a cure/panacea for an unsolved business need and as a result the solution will be sought after by a large proportion of the intended user population. By providing a much needed solution to a business problem, the disruptive innovation creates a "win-win" for both the user as well as the vendor. The user benefits since now they have a much needed solution to a problem; whereas, the vendor benefits due to a much bigger revenue opportunity (in any business, the potential/prospective user base usually constitutes the largest portion of the revenue opportunity) and increased customer satisfaction (a key to foster viral adoption).
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