The Insider's Guide to Next-Generation BPM
By Jim Frome, Chief Strategy Officer, EVP, SPS Commerce , 03/30/2009
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In just a few years, Software-as-a-Service (SaaS) has gone from a curiosity to a mission-critical application, accelerating into mainstream adoption. Faced with a dire financial situation, most businesses are taking advantage of the tremendous economies of scale that SaaS brings.
Yet that's only the beginning. The reality is businesses have just barely begun to leverage the real power of SaaS to transform the way they work, compete and survive. For it is not just in the applications they currently provide, but with thousands of companies using the same solution every day, SaaS companies are using their data and best practices to develop new applications and intelligence solutions that would be impossible to deliver in a software or managed service environment.
Imagine having the ability to leverage these by-products of SaaS solutions to drive business efficiencies, innovation and strategic advantage in ways that were impossible with a traditional software model. This is the true strength of SaaS.
Traditional software model holds users back
In a traditional, on-premise software environment, the vendor is far removed from its users. Sure, they may have annual user group meetings and sparsely attended online forums, but the vendor has little real insight into the day to day challenges of its customers. They cannot foresee important shifts in their clients' businesses that will foretell future needs. This is a raw deal for customers. Unless they're a major "player," the individual customer has little clout when it comes to requesting changes from their software provider. They bought the software. Now, for the most part, they're on their own.
This model does little to benefit software vendors either, who remain more or less in the dark about how they can truly add value for clients. The result: much needed functionality often does not emerge until a dire need bubbles to the surface. This lack of agility can cause irreparable harm to a client's competitive position. They need software that will serve emerging and often unexpected needs at a faster pace.
This was echoed in a recent conversation I had with Jeff Kaplan, SaaS guru and head of the analyst firm THINKstrategies. "Companies that purchased legacy applications were denied the benefit of keeping pace with innovation in two ways," he said. "First, there was no mechanism for the customer base to contribute feedback to vendors in an effective fashion. Second, they often were leery of software upgrades for fear of disrupting their business. In a SaaS environment they needn’t worry about that because all customers are working off essentially the same code base. Moreover, the iterative process of code updates in a SaaS environment alleviates business disruptions, enabling customers to benefit from enhancements immediately.
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