Software-as-a-Service (SaaS)Shyamanuja Das, Editor, Dataquest, Cyber MediaSoftware-as-a-Service (SaaS) expands the limits of outsourcing even as it shakes up the traditional governance role played by IT executives. Will sourcing professionals inherit the burden of sourcing or managing on-demand software initiatives?
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On Their Own At the outset of the software-on-demand era, the early adopters have often been startups, spin-offs, Small to Midsize Businesses (SMB) or business units without legacy Customer Relationship Management(CRM) and software investments. Take a company called 3 — Hutchison’s 3G mobile services. When it started in Australia, the 3G operators’ ability to make money was still being debated in Europe. Many analysts had started questioning the operator’s ability to make money in the consumer market from the offerings that were essentially touched-up 2G services. To compete with the existing mobile operators, 3 Australia had to be aggressive in terms of quick rollout of services, and make money from the business services. At the same time, for each new technology investment, it had to be extra cautious. That meant achieving three goals at the same time: Quick deployment of the essential technologies, eschewing up-front capital and delivering business services effectively from the outset. Though 3’s management set aggressive revenue targets, it was still risky to make technology investments based on those projections. In September 2003, Hamish Michie, Marketing Manager, Business Field Sales, 3, opted to go for SaaS, when he chose Salesforce.com CRM for his 140-people business field-sales team. “We needed a system, with low total cost of ownership, ease of deployment and flexibility, so we could mould it to our business as it grew,” says Michie. Though ease of deployment, by definition, has nothing to do with whether the product is delivered as a service or preloaded on a server, the new pure-play SaaS providers do trumpet it as a crucial differentiating factor. Since SaaS is being deployed in specific business functions, rather than enterprise-wide, most of the decisions are taken by business managers, instead of IT units. Struggling with technical problems is the last thing that line-of-business managers want to do. This requires the SaaS providers to excel in areas where traditional software providers have often fallen short — the ability to create cost-effective software that can be hosted reliably and delivered over Internet protocol. Quite plainly, as the market expands, some of the SaaS providers will need to partner with third parties to achieve scalable growth and maintain reliable service. Specific advantages apart, SaaS is today a manifestation of a much bigger trend in software — the shift in enterprise IT toward Service Oriented Architecture (SOA). The increasing reliability of Web as a business platform coupled with a growing comfort level with “buying” rather than “building,” means the environmental conditions are supportive, rather than hostile to SaaS’ pay-as-you-go business model.
About Author
As Editor Dataquest, Shyamanuja is responsible for editotrial strategy, planning and operations of Dataquest, India's most read business publication on IT.
He is a columnist and blogger for Global Services (www.globalservicesmedia.com), where he earlier worked.
Shyamanuja has been a business journalist for close to 14 years and has covered telecom, IT, and offshore outsourcing industries. His interest includes research-based stories, unconventional blog writing, and professional networking within IT industry. |
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