Two decades from its infancy, SaaS based architecture has seen phenomenal rise not only in terms of its adoption but also in the way business is conducted. Furthermore, the technological advancements, both in terms of infrastructure as well as the tools, have only helped accelerate this transformation – empowering companies to leverage the enormous potential it has for the present as well as for the future. What originally started as a cost effective solution for SMEs, this cloud based technology is being rampantly adopted even by large enterprises, enabling a significant number of their business functions to be digitally processed.
Software as a Service (SaaS), a subscription based business model, envisioned to be a game changing framework, is revolutionising the way software products are built and sold. It is a great example of disruption through technology innovation and also a perfect convergence of Desirability, Feasibility and Viability. SaaS, now for many - a way of life, is one of those timeless ideas that is here to stay and is expected to create a lasting impact on our digital transformation journey.
The emergence of this new technology has not only created opportunities for a large number of aspiring entrepreneurs, but also has forced many of the existing players to reconfigure their product lines to adjust to this new reality. Individuals with exceptional talent in a specific area of work can now monetize their skills by building tools that help them deliver solutions in the form of a service. This is one great differentiator, that the functionality is architected by experts, unlike the generic approach adopted by the traditional software owners. Coupled with the advantages of great reach the online world offers, the smaller players are not only cost effective but also are quick to the changing needs of the customers, besides offering them a personalized experience. Workday, Canva, Survey Monkey, Dropbox, Asana etc., are some of the new age SaaS companies, which did not even exist few years ago, that are challenging the status quo and all set to move into the big league. As a matter of fact the established ones are trying to play a catch-up.
HOW WE GOT HERE
For years, the companies that sold software products through conventional licensing models have had a joy ride charging their customers with exorbitant prices. In several cases the monopolistic nature of the products left many of their customers with no choice but to depend, leaving them distressed while the product owners continued to claim the premium and dictate the terms. It was a seller’s market. This apathy towards customers prevailed until developments in technology on the storage, distribution and device side have set the stage for the need of a different business model that made the usability and accessibility of the software products more affordable.
On-premise software products have started losing ground to their smaller peers attributed much to their inability to quickly re-orient themselves towards this new business environment. Here are some of the reasons why their customers have started hunting for alternatives:
(1) LARGE, COMPLEX & RIGID ARCHITECTURE: Traditionally, most of the software products have followed a highly formal and structured approach that was based on predictable system functionality. Besides, the business processes were mapped in a manner that factored-in a higher level of redundancy due to complex work flows, lack of a well defined functional architecture, multiple layers of authorities, overlapping roles and the absence of a cohesive collaborative framework. This has resulted in a rigid architecture, of a bureaucratic kind, causing long development times, costly in-process changes and difficulties in accommodating technological innovation. With disruptions in cloud based technology gaining momentum, many of these old-economy software producers are struggling to get their act together while smaller and tech savvy companies are finding creative ways to capture the imagination of the customers. Goes without saying, that many of these traditional software’s are victims of their own size.
(2) LONG LEAD TIMES FOR IMPLEMENTATION: The over generalization of the product architecture needed a high degree of configuration (& customization) both on the administrative and business side, therefore requiring massive amount of efforts leading to long implementation cycles. Limitations of the on-premise software’s could also extend to integration with the existing systems, interoperability, ensuring data integrity and change management, which further contribute to the long over-runs. Sometimes accommodating even a minor modification, to the initial scope, seems like a hard bargain. Besides, the re-engineering exercise often associated with enterprise-wide software applications adds to the already existing complexity, as it involves consultations with several departments, functional teams, solution architects and software developers, often impairing the timely implementation. The one-click-install is the need of the hour.
(3) ONE SIZE FITS ALL APPROACH: Trying to force fit the needs of every industry and business function on the pretext of building an integrated software solution lead to a complexity of magnitude that was hard to govern, control and manage. This can be primarily attributed to the product centric approach, adopted by the traditional software owners, which resulted in an over-engineered product that failed to deliver the value that the customers were looking for. In addition, on the customer side, it posed a huge administrative burden for the IT teams as the very nature of design left little room for self-help and always needed the support of a specialist. As a consequence for many of the small and medium enterprises, adopting these tech heavy systems remained a distant reality.
(4) WAY TOO EXPENSIVE: The licensing, annual maintenance and the associated infrastructure investments required makes the cost of ownership for on-premise software applications less viable even for large companies. This is more relevant in cases of ERP purchases – as the need for highly skilled resources, their time and the leadership commitment required, further escalate the costs and with implementation overruns ranging from 12-24 month, it’s a long wait before one realizes the true benefits. In cases of specialized on-premise software’s, the licensing costs for a single user runs into thousands of dollars, in addition to the annual maintenance fees that businesses have to bear, the capital intensive nature of such purchases can sometimes be detrimental to survival.
EMERGENCE OF THE SAAS MODEL
Just when businesses were looking for alternatives, the evolution of the SaaS model provided a perfect opportunity for many companies to reinvent themselves. In a world that is more connected than ever before, the mobile friendly, on-demand access and collaborative nature of this cloud based solution offered the flexibility and affordability that a number of customers were looking for. The capability of these tools to quickly scale up, with near zero implementation times and in a seamless manner, makes it a compelling case for realignment of the IT resources in favour of this shift in approach.
The very idea of Software as a Service has come a long way from its inception – delivering better value and enhanced customer experiences. In a very short span of time, this model has acquired the level of maturity, which for many years the traditional on-premise solutions failed to accomplish. Here are some highlights and key features of this new age technology solution:
1. MINIMALIST ARCHITECTURE: Taking advantage of the flexibility that today’s technology offers, many of the SaaS companies designed their products by carefully balancing the predictable, adaptable and the essential attributes of the system. SaaS companies quickly learnt that an over-engineered product, like the traditional ones, limits their ability to adapt to the changing technology landscape and so followed a keep-it-simple approach. The minimalist architecture helped achieved this objective by focussing on re-engineering functionality, optimizing workflows, exercising better control yet empowering users in a manner that created an enabling environment. This philosophy is embedded in each step of the development process, by the SaaS companies, which helped them build an effective, agile and easy to deploy systems delivering great user experiences.
2. DO IT YOURSELF APPROACH: Many of the SaaS applications let you set up the account and navigate through it, all by yourself, requiring no technical knowledge. There is literally no implementation required as these tools come with loads of self configurable features that let users to customize, collaborate and control these applications without seeking any external help. Moreover its takes away huge burden from the IT department as all the upgrades and installations happen on the vendor side, at no additional cost, while users continue to transact enjoying an uninterrupted and hassle-free delivery of services. Besides, users also have access to a number of free resources that they can take advantage of and make their digital workspace even more personalised.
3. NICHE SOLUTIONS: Moving away from the practice of building customized applications in-house, the availability of a wide range of niche SaaS solutions makes it possible for customers to choose one that exactly meets their needs. Users can extract better value as these solutions are built by experts in that particular area of work and so the effectiveness in addressing that specific need is very high. Furthermore, these tools can be accessed on-demand, while using it as an add-on to an already existing generalist SaaS or other systems, making it an interesting proposition for businesses seeking specialized digital solutions.
4. SEAMLESS INTEGRATION: The SaaS platforms demonstrate a great amount of flexibility to operate and are independent of devices, technologies & IT infrastructure that a company currently possesses. Users can start working with these applications right from the word go as they are simple, easy to use and do not need a whole lot of training. The SaaS apps are built in a manner that they can easily be integrated with other systems ensuring data consistency, interoperability and document control. Furthermore, the agility and the multi device compatibility that the SaaS applications offer, the users can access all the organizational resources effortlessly from anywhere and collaborate in real-time in a seamless manner.
EMBRACING THE SAAS CULTURE
Institutional readiness is the first step towards embracing the SaaS culture, while the company leadership plays an important role in creating a shared need and mobilizing commitment. I still remember during my days with GE, almost 2 decades ago, how the e-productivity initiative has set the agenda for the entire organization and promoted a common culture to embrace the digital transformation journey that the company was embarking on. Technology adoption is one way to drive that change in behaviour and subscribing to new age digital solutions presents a perfect opportunity towards achieving that goal, while maximizing the benefits of innovation. This calls for a concerted effort in choosing the right tools across business functions, either multidisciplinary or an integrated one, with a focus on delivering consistent and measurable performance. In order to derive the real benefits of this transition, it is also imperative to establish a mechanism where everyone in the organization stays connected, as they adopt different tools, and be engaged with each other in a manner that creates an atmosphere of belongingness and working as one team.
At times, it may be frustrating to use multiple apps to perform a single task and so it is advised to explore the possibilities of customization that can offer a seamless experience. However, customization comes at a cost. There are also situations where some of these tools are not solving your problem and so might need to be switched. This could cause an aberration in the organizational functioning, as many of them have already gotten used to it, could face reluctance for using a new one and so the change needs to be managed sensitively due to loss of trust that could impede the efforts for the next choice.
Unlock the full potential of technology by empowering employees to source their own solutions contrary to the centralized approach governed mostly by the IT department. Employees are now seeking modern, convenient, personalized software apps and do not want to be restricted by standard set of stack offered by the companies. The availability of a number of SaaS based tools has opened up several possibilities for meeting these expectations. In the changed scenario, IT is expected to play the role of a facilitator - helping teams to collaborate, ensuring productivity and optimizing costs. Enterprise SaaS management platform is one such technology framework that helps achieve this objective - creating visibility of various tools which are in use across the company and effectively manage them under one umbrella. The focus of IT is clearly shifting from merely a rule making body to enabling teams working towards a common culture.
CONCLUSION
What once seemed like an impossible proposition, SaaS solutions have swept through every industry and business function, that you can think of, capturing a significant share of the market from likes of SAP’s, Oracle’s & Microsoft’s of the world. Out of the total 15000+ SaaS companies, the past 5 years has seen the highest growth, with nearly 50% of them (7500), and this number continues to expand as more and more companies, both existing & new, embrace cloud based technologies. The revenues for SaaS solution providers, worldwide, are expected to hit $150 billion by 2022, as per Gartner research, and with higher IT budget allocations in their favour, SaaS companies seem all set for a higher growth trajectory.
The growing need for businesses to transact digitally has pushed the boundaries of technology innovation. Advancements in cloud enabled solutions are forcing many companies to re-think their digital strategy and therefore are re-aligning their resources to take advantage of various possibilities they offer - Improved mobility, faster scalability, higher compatibility and greater agility being some of the influencing factors that are driving this change in approach. True transformation occurs when these solutions are designed in a manner that create an enabling ecosystem, promote a collaborative culture, improve operational efficiencies and deliver enhanced user experiences.
If you are looking for developing a SaaS based product, check out our custom application development services. Do get in touch for a free consultation.
