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Software-as-a-Service (SaaS) is a growing phenomenon in worldwide business today. From the original ideas of outsourcing the data center and having third parties manage the software. SaaS also referred to as On-Demand is not “same old software as a service.” It represents a breakthrough in technology delivery, serving as a powerful catalyst for changing the value proposition and economics of business management.

SaaS in the Market Today

Business solutions delivered as service are a rapid and substantively growing presence today. Researchers IDC and Merrill Lynch forecast close to an $8 billion dollar spend on SaaS solutions in the Americas alone in 2008. Thinking strategies have found that enterprises of all sizes are rapidly adopting SaaS to overcome the hassles and costs of implementing traditional packaged applications.

Businesses today can spend a huge amount of their budget on the software packages that they use to manage their businesses. They also spend an even larger amount on the hardware, networking, and operating software infrastructure that is required to support those applications. But they spend even more than that on the staff to service and manage them.

Companies considering their software spend often forget or ignore the cost of user training, and more importantly, the long-term cost of software maintenance upgrades, integration expenses, and the cost of conducting these tasks over and over again.

The Business Benefits of Software-as-a-Service

Experts agree that there are many very distinctive business benefits to running a business via Software-as-a-Service. These include lower cost of ownership, access to state of the art versions of your application, faster time into production, and access to a superior computing environment than most customers can provide for themselves. Equally compelling, however, is the concept of focus within your company: the ability to focus on your business and not be distracted by the upheavals of managing a technology infrastructure and the IT staff to keep it under control.

Let’s look at what research tells us are the principle benefits of the SaaS model for accessing business management applications.

Cost of Ownership

The cost of initial start-up may be the most well-known in cost savings with SaaS. Because the subscription model for licensing provides predictable costs (not possible with licensed software), budgeting and planning is easier and more reliable. In addition, with modular product availability, companies do not pay for functionality they do not need or want to use.

Faster Time-to-Production

The time to deploy an application determines just how quickly the organization can benefit from it. Unfortunately, large and complex implementations can take months or years to complete, especially when IT professionals are in short supply, users are located around the world, and disparate new business units must be brought on-line. Organizations often find that are they simply cannot upgrade infrastructures, adopt and deploy new technology fast enough to keep pace with their business needs. And protracted in-house implementations consume already limited IT resources that could be used to pursue more strategic business goals. The impact of time-to-production correlates with productivity loss in terms of personnel unable to do their jobs at maximum efficiency until the new system is deployed.

Enhanced Scalability

Companies expand and decrease in size over time; witness the compression in employee counts with the bust at the start of this century and the following expansion. While most proponents of the SaaS model talk about the ability to seamlessly add companies, employees, higher volumes and transaction counts over time, it is important to note that both business expansion and contraction is accommodated easily in the SaaS model. The on-demand model is designed for rapid scaling; applications are immediately available to new users when they are required, giving organizations the flexibility to expand operations without waiting for their IT infrastructure to catch up. Organizations can simply “turn on” new applications, as they are needed. This guarantee of flexibility is not possible in any other business model today.

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