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The Business Case for SaaS What are the benefits related to moving your products from Asset-based to SaaS-based? A friend looking to develop very specific software for his business, asked me recently what the big deal was with "this SaaS technology" and why should he use this form of development over traditional software. To him, the measure of success for his business was having "its own branded software that comes in a box and everything." Eventually I persuaded him to get with the program using the following 7 points below. The start is with the "obvious" benefits: 1. Richer user experience – SaaS apps bring Web 2.0 usability to the enterprise world through rich internet applications using Adobe Air, HTML 5, Microsoft Silverlight, and other tools. 2. Rapid implementation – SaaS applications focus on configuration and integration, not hard core implementation. Users can be up in days/weeks, not months. 3. Frequent cycles of innovation - At present, most vendors introduce new functionality, enhancements, and bug fixes on frequent refresh cycles. Some vendors provide as frequent as weekly updates, others – seasonal. 4. Minimal upgrade hassles – Users focus on minimal testing scenarios and receive updates all at once. In applications with significant regulatory and tax updates, SaaS applications reduce the cost of compliance by as much as 77%. 5. Always on deployment – Organizations can expect average up-time levels at 99.95% or higher for most applications. These results often exceed existing on-premise performance. 6. Subscription pricing – Subscription pricing reduces the capital burden of common on-premise payment models. 7. Scalability – Organizations can add or subtract users as needed without worrying about procuring new hardware and other infrastructure. The next step is to recognise that there isn't an apple to apples comparison with Legacy software for the above reasons and because of the benefits multi-tenancy brings-namely Ecosystems and the Network Effect. Then the key is to look at what network effect data, ecosystems and continuous improvements can do to the ROI calculation. However, to an organization that has one business model, trying to make a case for a different one is challenging and the issue isn't the bright future. It is the dislocation, risk, loss... (It turns out people are more sensitive to their perception of loss than they are to the gains. See a part of behavioural economics called Prospect Theory) Therefore, it is imperative to make sure to manage the perception of loss and risk and then address the upside. One of the hardest things for people to realize is the cost of inaction can be far more painful than the benefits of taking action. Even with all the benefits of SaaS, you may have to make the case for gradual change so the company can find out that the future is not as scary as one may think/feel. The "quick-wins" approach would greatly help in bringing comfort. Bloger: Jean-Jacques Gauvin |
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