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SaaS | Cloud Computing — The New Economic Model for Enterprise IT

by Michael P. Binko, APR CEO and President, kloudtrack®

Enterprise software and application deployments have often been a challenge for growing companies – particularly for small-to-medium enterprises (SMEs).  The challenges have concentrated around how to reduce total cost of ownership (TCO) while ensuring maximum return on technology investments (ROI).

Until recently, SMEs had few options other than working with off-the-shelf software applications that were primarily developed and packaged in a manner best suited to larger companies with big budgets and properly staffed IT departments.

Enter the Internet, pervasive broadband networking and SaaS|Cloud computing — forming a strong foundation for a new economic model of enterprise information technology (IT).

Over the past couple of years, a broad revolution known as Software-as-a-Service or Cloud (SaaS|Cloud) computing has been changing the software industry at fundamental levels. The SaaS revolution primarily benefits SMEs as the basic tenets of the movement include:

  • simplicity
  • flexibility
  • security
  • scalability
  • predictable costs

The Ease-of-Use Factors
Simplicity is a fundamental element of SaaS. In essence, enterprise end-users need a computer, a Web browser and their username and password to have immediate access to their critical software applications – no matter if this user is in the office or on the road.

This mobility is one example where simplicity fuses with flexibility — another is workflow and business rules. For example, a junior account manager could upload new prospect information at their desk during initial telephone conversations. The same staffer or co-workers could access the information perhaps while on the road.  Updates or senior staff approvals could then be completed in accordance with a pre-described workflow routine.

Subsequent changes and workflow routines would then also be managed, reviewed and approved as they occur.

Safe and Sound
While ease-of-use and data management benefits are readily apparent, many SMEs seem hesitant to adopt SaaS because of perceived security risks.  The fact is that SaaS|Cloud is just as safe, and often more secure, than traditional client-server or distributed “gold-disk” software. A few reasons for this include continued enhancements in data center security and the fact that updates to SaaS|Cloud applications can be automated and immediate, with built-in assurance that all users are operating with the most up-to-date versions.

This can be a tremendous time and budget saving aspect of SaaS|Cloud for bootstrap and growing businesses alike. Furthermore, for companies operating in heavily-regulated industries such as banking/finance, healthcare/medical, legal, government and others, most SaaS services incorporate baseline compliance factors (such as up-time assurances) as a part of doing business.

Examples include support for FINRAand SEC data archiving regulations in banking and finance and eDiscovery on the legal front. (**NOTE: Keep an eye on future issues of The KADRE™ for more in-depth discussions of these topics.)

TCO and ROI
Predictable costs and scalability are also two critical components that make SaaS|Cloud a no- brainer for SMEs.

No longer does the management team need to schedule an onsite update of users’ computers, as edits to user profiles and upgrades to the applications are all completed automatically and remotely.

This alone can mean a reduction in IT consulting expenses and can free-up internal IT teams to concentrate on addressing other strategic needs.  Pricing models for SaaS also typically have low points of entry and only increase as an SME grows or increases their use of the SaaS/Cloud applications.

In short, the SME has little risk in testing the SaaS|Cloud waters and can manage growth as well as the associated costs in a very scalable manner. In addition, the true TCO and ROI benefits shine through for the SME with the simple fact that hard-costs of application server equipment and data center infrastructure are managed directly by the SaaS provider.

So, even though the story of SaaS is in its early chapters, SME companies across a wide variety of industries are realizing that picking up the flag of revolution, in this case, is decidedly in their best interest.

On July 16, 2010, posted in: Recent Articles by
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