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The SaaS landscape is changing at the expense of on-premise software. That’s the finding at a recent InformationWeek conference focusing on the future of software. An interesting yet somewhat obvious point is that very few of the large enterprise software companies are really geared or willing to adopt a strategy to serve the SaaS market.

SaaS has matured gracefully as it gains more confidence among CIOs. Any IT investment these days must consider SaaS as a viable option for its inherent benefits, while “on premise” software is seen as old school or legacy. With the emergence of new product categories such as employee reviews management, SaaS fills the gap where the traditional software companies won’t even touch.

One area the panel didn’t mention is accessibility. The functionality in on-premise software previously only available to companies willing to pay six-figure implementation costs is now offered through SaaS for just a few dollars a day. Small and medium-sized companies can have enterprise-class functionality without a huge burden on resources. This is especially true of the supply chain where logistics companies of any size can now have an affordable warehouse management system (WMS) in place to gain inventory visibility because of SaaS. Before SaaS, you were stuck using Excel files, paper-based systems or shelling out for expensive on-premise software.

One other interesting perspective…the recession undoubtedly has helped with the adoption of SaaS because of its lower cost and faster implementation time, but the recovery could actually push that further as companies that skimped on IT scramble to meet needs. With all the cuts during the recession, getting up to speed to take advantage of the recovery will be difficult with traditional software and its long implementation time. SaaS, on the other hand, can be operational in as little as a few weeks.

Except from the InformationWeek conference:
  1. Board of Directors support: “Before the boards were asking ‘What’s this SaaS thing?’” said Ray Wang, consultant with Altimeter Group. “…Now, they’re saying ‘Why aren’t you doing something in the cloud?’” Woe to any CIO who pitches a big IT investment without addressing the cloud option.
  2. New product categories: SaaS can “pioneer new application categories that the SAPs and Oracles don’t show any interest in,” said Christopher Lochhead adviser to SuccessFactors, a service for managing employee reviews. This raises the concern, though, that IT must integrate these hordes of niche services.
  3. Attitudes about “on premises” are changing: Wang said everything on premises will come to be seen as legacy, like a mainframe today. Workday CTO Stan Swete said on premises will come to be only be those things “written by you, unique to you, owned by you.”
  4. The recession helped SaaS: That’s because SaaS can be implemented more quickly, with less upfront capital, and often less training, says Lochhead.

Global CIO Blog
By Chris Murphy
September 20, 2009

Posted in Uncategorized
Views 885 Comments 0 Email Blog Entry
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