Manas Kumar, Thinking out Loud

my thoughts & visions for technology

Posts Tagged ‘Software as a Service

New Zealand Software as a Service Company with a winning business model

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No one can underestimate the potential of small- and medium-sized businesses (SMBs). Depending on how they are defined, it is estimated that there are between 35 million and 100 million SMBs worldwide.

They are more nimble than big enterprises, respond faster to their customers’ needs and have a greater growth potential overall.

Like big enterprises, SMBs can also benefit from IT. The Customer Relationship Management (CRM) application, for example LiveCRM, can help them maintain their customer bases.

However, SMBs differ from big enterprises in their financial capability and in their ability to absorb losses when an IT implementation fails. Therefore, SMBs have to be extra careful in their IT spending.

In addition, unlike big enterprises, they do not normally have the resources to take care of their IT infrastructure. But, because they exist in such a large number, it is not surprising that a lot of software companies have developed solutions for this huge segment of IT users.

One way to make the software available to SMBs without draining their financial resources is to deliver the software as a service. Thus, a new software delivery model has emerged called “Software as a Service“, or SaaS.

The new model is intended to lower the cost barrier for SMBs. Instead of having to invest in their own servers and software, SMBs would be able to spread their IT costs over a longer period by buying the services that would help them grow and compete against their competitors. The concept of cloud computing explains this well

The SaaS concept is not a novel one. It has been around for some time. A number of companies, including Independent Software Vendors (ISVs) like Genesis Interactive, have been making it available to SMBs.

Now Microsoft has come up with a new wave of SaaS that it calls “Software plus Services”, or S+S.

The basic tenet of both SaaS and S+S is that the software is run and managed by third-party providers. With the S+S, however, some of the software still resides on servers and desktop PCs located on the SMBs’ premises.

Being a software creator, Microsoft naturally wants to perpetuate the need for end customers to buy their software. Come to think of that, although the services can be made available and accessed through the Internet, every user will still need the operating system and a browser on their computer. So, to me, the distinction between SaaS and S+S is not as significant as it may seem.

Three models of S+S will soon be available: An end customer would have all the software on their own server, but a Microsoft business partner would help run and manage it for them.

There will be no need for the SMB to hire a high-salaried IT manager or build their own data center, and therefore they will be able to keep their overhead costs down. Or, the business partner can host the software and deliver the needed services to the SMB. Another option is that the hosting is provided by Microsoft.

Flexibility in delivering the services is necessary, because in some countries there are regulations that prohibit storing and managing a company’s data in an off-site data center.

Written by manaskumar

September 29, 2008 at 11:42 am