Software as a Service: The basics

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Years ago any company just opening their doors had to face the unfortunate prospect of buying software packages for every single one of their workstations.

The immense costs of these packages left cash-strapped organisations with three unsavoury choices: use free software that is not the industry standard, go without software entirely, or illegally download the needed programmes.

Each of these, as you’d imagine, are detrimental to any businesses, and even more so for these small companies that are just starting out. Using free alternatives means that anything created in those environments may not be suitable when it comes time to sending files to clients. Even if that software does match up with the premium software in the market, it may lead to staff training up in programmes that may not be relevant in the future – bad for current employment, and their prospects later on.

Forging software is another “possibility” that just isn’t feasible any more. Trying to balance the books or write-up proposals with a pen and pad just won’t cut it anymore if one wants to be taken seriously. Even the small family businesses and mom-and-pop stores operate digitally now, so coming into the market below that point is unacceptable.

Finally, there’s the illegal route. Putting aside the fact that piracy could lead to jail time, “free’ software on the internet can result in viruses and Trojans that can cripple a company. With recent hijacks of systems all around the world happening even to organisations that pay for their software, opening up another attack vector for bad actors through piracy should be avoided at all costs.

Luckily, companies who offer this software have realised that outright buying their products for large sums of money did not properly benefit them or their consumers, and they’ve moved to a new model.

Software as a Service, or SaaS, turns these programmes into a service that you pay for in smaller increments, usually on a monthly or per-use business model.

Microsoft with their Office Suite are probably the best-known example for Software as a Service. In the past, anyone wanting to use this suite needed to fork out for the latest version so they could have access to important elements such as Outlook and Excel.

Now, however, businesses can pay for access to Office 365 on a monthly basis for each employee by paying for an annual commitment.

Less upfront cost is just one of the benefits here, and Nick Keene – Modern Workplace Business Group Lead at Microsoft South Africa – highlights a few others.

Why are subscriptions better when it comes to business?

Keene tells us that technology is moving so fast in the present day that it’s becoming more and more difficult for businesses to keep up. One way that they’re trying to stay ahead of this curve is to transform their business so that the latest updates are delivered by the cloud.

In the older days of software, you paid for a single version that came on a disc which you installed and worked on. While updates would sometimes be available through other discs or the internet, patching in security and functionality was a chore. With SaaS, being connected to the internet means that updates are continuous.

“Consider technology as an on-demand service and not an asset that depreciates on the balance sheet,” says Keene, “This leads to the thought of renting technology and the ability to rapidly provision or de-provision technology.”

This change in how a company budgets for its important computer infrastructure can go a long way to helping absorb these costs, which are much more palatable than the high upfront ones of the past.

“Subscription services of this technology allows for consumption-based billing leading to a reduction of [underutilised] resources,” adds Keene.

How Software as a Service can help fledgling companies

That previously-mentioned infrastructure, while being an investment in any company, can also be a risk. New hardware can make the original installation obsolete, and the risk of downtime for maintenance or upgrades means lost work hours.

There’s also the need for insurance on the expensive hardware and dedicated space in the building.

“Software as a Service provides a server-less environment for the customer to use the application. The application can then be unbound from dedicated infrastructure providing the ability for the application to scale based on demand,” Keene says. Adding that, “consumption based billing then allows the customer to benefit from off-peak demand and usage.”

The term “thin client” has been around for a very long time, describing a terminal with little computing power of its own, instead depending on that from a local server or over the internet. With faster connections in the country and more SaaS on offer, cheaper terminals like this may be a reality in the future.

The rands and cents

One way businesses saved money in the past was to strike deals with software providers, buying out packages that included dozens, hundreds or thousands of keys at once and receiving a proportional discount from the vendor in return.

While this does still happen to a degree, the savings in SaaS are found elsewhere and do not require th huge purchases of old.

“Real cost savings can be achieved by consumption-based billing and SaaS applications that have the ability to scale resources usage on demand,” explains Keene, “Start using what you need and as the business demands increase, provision the right technology at the right time for the organisation,” he concludes.

Software, as with almost everything in life, comes down to rands and cents. The worldwide economy has become more open than ever when it comes to starting a company thanks to the barriers to important software being brought down to a place where individuals can buy in, and not just large companies.

SaaS is an important part of that and more, if not all, software vendors will probably move into that space in the near future. Companies big and small need to be aware of this and use it to their advantage, instead of it being another worry when it comes time to balance the books.


[Image – CC 2.0 By FutUndBeidl]




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