Software as a Service (SaaS) makes sense

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Why buy the milk when you can rent the cow? Many businesses find that software subscriptions may be more economical and efficient than endless cycles of software purchases, upgrades, and customization.

Only a few years ago, most businesses felt the pain of being software licensees. The cycle went something like this:

1 › Issue a request for proposals, then pay big bucks for proprietary software.

2 › Pay annual service-agreement fees for tech support from the software company.

3 › Assign IT resources in your company to install, configure, and customize it.

4 › Pay for trainers from the software company to train staff how to use it.

5 › Endless installs of patches and upgrades.

6 › Find out, a year or two later, that another company has a better software product now that wasn’t available when you purchased the software you’re using, and now you’re too invested to switch to another.

Sound familiar? That’s why “software as a service,” or SaaS, has become so popular over the last few years. Also known as “cloud computing,” ASPs (application service providers), or “on demand software,” some say SaaS is just a trendy new tech term for something that’s been around as long as the web has been around.

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In the last couple of years, however, there has been a cultural shift in the way businesses evaluate their software needs, and SaaS is looking like a better option, especially for small- and medium-sized businesses that don’t have the IT resources and infrastructure of bigger enterprises. The principle is that an application service provider can take advantage of economies of scale to offer cheaper, more reliable, and often better applications than companies could afford themselves.

One example of this is web content- management systems (CMS), which provide a platform to make web content changes less technical and more manageable. Typically, large companies that want to purchase enterprise-level CMS software pay capital costs of anywhere from $20,000 to $200,000, not to mention implementation and training costs, followed by ongoing operational costs for support, training, and enhancements.   

A Vancouver-based company (with offices in Miami as well), Sitemasher www.sitemasher.com, offers an attractive and award-winning alternative. Its platform lets companies design, develop, and host a website on Sitemasher, and the integrated content-management system makes it easy for even non-technical staff to make changes to the content. And, it’s all offered for a basic subscription price of $99 a month for three “seats” or users.

Kevin Kinghorn, the director of the website and new media with the Vancouver Canucks, says Sitemasher was a clear choice to redesign, host, and manage their GM Place site, to be completed later this year.

“We’re very excited about getting our hands on [Sitemasher] and really figuring out new ways to leverage the power of the Sitemasher environment and possibly developing some new features with the team. It was easy to see how Sitemasher would help us in an environment where several different users at various skill levels are relied upon to maintain a corporate website.”

One of the challenges with SaaS can be the level of support. Some services provide real-time chat on their website, a toll-free number, a peer-to-peer forum for users to post questions and get answers from other users, or an email address where you can send inquiries. But with some SaaS providers, levels of service can be less than desirable.

Not so with Sitemasher, says Kinghorn. When asked what advantages they saw in using an SaaS instead of buying content-management software and running it on their own servers, he cited the customer service.

“The Sitemasher team has really gone out of their way to help make the transition easy, including conducting on-site training. And where a purchased CMS might fall short of our needs, they’ve developed the product to suit. Not only that, but their hosting environment is second-to-none, which takes a lot of strain off our IT department.”

The main risks in going with an SaaS provider are when a company’s IT systems require extensive integration with an SaaS application, when a company requires a large amount of customization from the vendor, and also when an SaaS company becomes financially unstable. What happens if your provider goes out of business overnight? Or is sold to another company? What if subscription prices shoot up at contract-renewal time? Each SaaS provider should be evaluated for these potential risks.   

SaaS applications are usually priced for a small minimum number of users and payment plans that scale up for additional users, more bandwidth, and storage. There’s a broad range of SaaS applications on the market right now. (At the site www.saas-showplace.com/saasproviderdirectory/saasapplicationcategory.html, you can look up SaaS providers by category.) Here are some examples of popular SaaS applications in some of those categories:

Office productivity and tools: Zoho is a reputable SaaS company based in India that provides a wide range of office applications on-line at cheap or reasonable prices. There’s an on-line word processor, spreadsheet, document management, customer-relationship management, project management, business intelligence… the list goes on. Free versions are available with limited features, and prices for additional service levels start from a few dollars up. www.zoho.com

Customer-Relationship Management: Salesforce.com bills itself as “the world’s favourite CRM,” and it is indeed one of the leaders in providing a customer-relationship management database to organizations for sales, service, marketing, and call centre operations. A full-featured CRM costs as little as $9 a month per user for their Group Edition. www.salesforce.com

On-line Invoicing: Freshbooks takes the challenge of invoicing off your desktop and onto the web. It can create, manage, and send invoices, track time and expenses, and even accept payments through PayPal. There’s a limited free version; after that, pricing starts at $14 per month. www.freshbooks.com
Media monitoring and collaboration: DNA13 helps companies manage communications, public relations, and media management on-line. IDC consultants headquartered in Massachusetts called it “One of 10 Canadian New Media Companies to Watch.” It’s used by RBC, WestJet, Scotiabank, city of Calgary, L’Oreal, and Nestlé. www.dna13.com.

Internet Payroll: Ceridian Canada’s Powerpay Web is an Internet solution that allows employers to input payroll data and process payroll on the Web. There is a base charge per payroll run plus a nominal fee for each payment produced. www.ceridian.ca
Performance Management and Compensation: Salary.com offers on-demand software for talent management and compensation data for personal use, small business, and enterprise-level organizations. See www.salary.com.