Before Software-as-a-Service, the latest and greatest business applications -- ERP, CRM, HR, and financial packages -- were restricted to large enterprises able to pay for and manage them. But SaaS delivers this power to smaller businesses
Less risk, more reward? Regardless of how you do the math, software-as-a-service (SaaS) applications are providing smaller businesses with software capabilities that previously only larger companies could afford.
For example, when Steven Vine, deputy general counsel for Register.com, joined the company about a year and a half ago, the new CEO was pushing the company, which now has about 500 employees, from being just a domain name registrar to become a provider of online business services. Vine, however, identified one pressing challenge: "We didn't have a clear idea of which contracts we have," he says. That's because all business contracts were signed, scanned, and then saved to hard drives. Whenever a contract-related question arose, the legal department had to find and read through the entire contact to locate the relevant provision. This was a time-consuming process, especially as contracts average about 20 pages in length, and some reach 100 pages. Furthermore, it meant that crucial information -- such as customers' contract expiration dates and Register's own service-level agreements with suppliers -- remained in the legal department silo and those in other departments couldn't see them easily.
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Many law firms address such problems by using contract management software. Yet Vine says there were few contract management applications suitable for his company's legal team of four users. Most software was too expensive or available only as an add-on to customer relationship management (CRM) or finance applications that Register didn't use. Then Vine began testing Mumboe, a document management application available via SaaS. Soon, he subscribed the entire legal department -- after getting the data-security green light from his IT department -- and in the future hopes to add HR and finance employees, too. "One of the nice things about Mumboe, in comparison to those other systems, is that it's focused on contract management, it fits my budget, and because they have a per-user pricing model, we can start small," he says. "And I don't say that in any way to take away from the fact that the system works, and it works well."
Like Register, many smaller businesses are now using SaaS applications to meet their business needs, large and small. And why not? On-demand applications typically have no startup costs, require no infrastructure investments, avoid vendor lock-in, offload upgrades, and don't require an IT staffer to baby-sit the application. Instead, they offer a predictable monthly subscription fee. Just sign up with a credit card and start using a new application the same day.
Yet despite the hype (SaaS poster child Salesforce.com alone spends a reported $500 million on sales and marketing annually) and the widespread availability of so many types of SaaS applications, this approach to software distribution is no cure-all. "Whether it's SaaS or it's on-site, you're trying to solve a business problem, and that's basically what you have to solve first," says Chris Harrick, senior director of product marketing for SugarCRM.
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Next Page: Not Everyone's Sold on SaaS
