With SaaS software on the increase in Australia, now has never been a better time for SMEs to embrace new technology in the wake of the current financial crisis. So what is SaaS and how can it help your business?
Quite simply, SaaS, pronounced ‘Sass,’ stands for Software as a Service. SaaS is an on-demand, scalable software solution that provides applications via a private network (or the internet) for a monthly subscription fee. The applications are typically hosted by the vendor or service provider in a secure data centre. In practice, this means that a company can outsource its desktop, applications, server, data and disaster recovery strategies and reduce the headache of managing their own IT. The hosted desktop also means that applications and data are securely accessible from any PC – anywhere in the world.
Analyst houses are all predicting huge things for SaaS. IDC predicts that the SaaS market will be worth $10.7 billion by 2009. Springboard Research forecasts that the SaaS market in Asia (which includes Australia) will reach US$1.16 billion by 2010, with a compound annual growth rate of 66 percent, to comprise 15 percent of the enterprise software application marketand. The SaaS market in Australia and New Zealand is expected to grow at a rate of 65 percent annually according to research group Forrester, and will be worth $506 million by 2010. There is no doubt, SaaS is going to be big!
A new trend in software
But where did the concept come from? SaaS is part of a trend towards internet-based automated services. Gen Y’s relentless demand for connectivity has played a large role in the evolution of SaaS. With some Gen Ys (birthdates 1980-to-1994) now almost hitting the 30 mark, they are placing an increasing role in shaping the agenda of business. Their obsession with instant communication technologies such as Facebook and instant messaging means they are after instant gratification without the hard work – SaaS!
The proliferation of PDAs and the modern business exec’s demand for a true mobile office has also contributed. The widespread availability of broadband has made this all possible; execs can access products with full functionality anywhere, anytime , while all applications are managed and hosted remotely by a SaaS provider.
So what are the main benefits of SaaS? Why is everyone jumping on this bandwagon? Many businesses believe the biggest advantage of SaaS is that it truly frees up resources. No longer do they have to worry about system upgrades, maintenance, data protection or disaster recovery strategies – this is all outsourced to the service provider. Most providers also offer a 24/7 helpdesk with remote access to clients’ systems allowing round the clock troubleshooting. Many in-house IT people are now able to redirect their energy into formulating beneficial IT strategy as opposed to undertaking mundane software work and maintenance responsibilities.
According to Springboard, cost savings are high on the list of reasons why SME adopt SaaS software. The SME’s surveyed by Springboard said that they had saved between five and 55 percent in software costs, compared to if they had bought the software under a traditional model. More than 50 percent saved between 20 and 30 percent in costs. These are compelling figures that can’t be ignored.
The other great financial benefit of SaaS is the fixed cost per user, per month price arrangement. Businesses no longer have to plan for expensive annual software license renewals as this is all factored into the per user, per month fee. SaaS is becoming increasingly attractive to SMEs as they are able to access a high quality service at a reasonable price. They can benefit from expertise that would be beyond their reach without SaaS.
The current skills shortage means that it is increasingly difficult to find IT personnel. ICT course enrolments are down 30 percent, the nation’s networking sector is short 6,000 workers, and many IT recruiters believe that things may worsen before getting any better. A SaaS implementation means that trying to find the right people is no longer an issue.
The accountability of software vendors is another benefit of purchasing software under a SaaS model. The vendor has a vested interest in ensuring their products do what they promise as they are ultimately responsible if things don’t go to plan. Many argue that there is no better way to keep vendors on their toes!
Why SMEs should be SaaS-y
So who are the main users of SaaS? SMEs have been the first group to run with SaaS as it is easier to make significant changes with between five-to-500 employees. Large corporations are usually more entrenched in one particular system and find it harder to make such a beneficial change so easily. The Financial Services Institute of Australasia (Finsia) recently embraced SaaS with the implementation of a SaaS solution that saw the company save 60 percent of the cost of managing the solution internally. Finsia is Australasia’s premier membership organisation for the financial services industry. It was formed in 2005, following the successful merger of the Securities Institute of Australia (SIA) and the Australasian Institute of Banking and Finance (AIBF). In 2007, Finsia sold the education component of its business to Kaplan Professional.
Finsia is the only professional association to represent the entire spectrum of financial services across Australasia – including the wealth management, banking and finance and capital markets sectors. Finsia employs approximately 50 staff and has offices throughout Australia and in New Zealand.
“The sale of Finsia’s education business provided an ideal opportunity to reassess our IT strategy and needs,” says Manager IT Services David Kennedy. “This involved undertaking extensive research and analysis to establish the costs of managing a new solution internally including building a data centre and server; purchasing hardware and software, training staff to implement it, maintaining the new solution, and minimising downtime.”