Software-as-a-Service or Internal Deployment
Software-as-a-Service (SaaS) is an old solution made new again by IP technology and Cloud-Based computing business models. Prior to the availability of IP-based technology these solutions were called “time sharing” as far back as the 1950s, and later “information services.” SaaS markets will always exist when smaller companies desire the Information Technology capabilities that only larger companies can afford. SaaS business models are predicated on clients purchasing shared infrastructure and cost and paying for services on a use-basis. IP-based solutions have substantially improved the deployment and operations cost while standardizing capabilities.
In the past 10-years, SaaS has become a viable solution for larger corporations seeking to shift operating cost and capital investment in information technology that no longer represent a strategic advantage. This most often occurs when internal IT operations can no longer differentiate themselves continuing to operate and maintain a standard enterprise software package. In some cases, large strategic software solutions can become so cumbersome and risky to operate internally that SaaS solutions may also appear accretive. Examples include wireless telecom billing, financial packages, human resource packages.
Most recently SaaS solutions have become a transformative solution which help corporations achieve in-year benefits including decreased operating costs. By quickly upgrading the technology that powers a portion of the business (e.g. human resources management software) the cost savings, process improvements, and employee satisfaction benefits can mitigate pressure to use short-term solutions such as labor arbitrage. Since the advent of business process reengineering and optimization (e.g. Six Sigma) in the late-1980s service-based software solutions have increasingly drawn the attention of business executives looking for opportunities to transform business processes and reduce cost.
SaaS solutions are often the best answer to driving improvements, but for larger enterprises they typically represent significant contractual liabilities, regulatory exposure, privacy concerns, and the risk associated with an adjunct IT operation that is designed to deliver standardized capabilities and not customized capabilities. SaaS shouldn’t be driven by ad-hoc needs, but instead should be integrated into an overall enterprise strategy, where the needs and concerns of the organizations are well understood before sourcing begins.
Adam Smith Consultants bring deep experience with both capital investments in Information Technology as well as Software-as-a-Service solutions. Our consultants have led the development of business cases, transformation strategies, and sourcing, as well as managing the launch and deployment of internally delivered capital projects as well as service-based solutions.
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