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Springboard Research estimates Indias IT spending to grow at the rate of 14.1% in 2009, down from 18.1% in the previous fiscal. No prizes for guessing, the decline in growth rate can be attributed to the word we have all come to dreadrecession. With economies around the world reeling under the meltdown and showing no signs of respite, CIOs across the spectrum are having to face cutdown in IT budgets. Even though Indian companies are showing signs of increasing focus on core areas thereby increasing dependence on technology; a flip side reveals enterprises focused more on RoI (including current IT projects) and enhanced planning. Clearly the pressure is on the CIO to shift from the more expensive on-premise model (prevalent until now ) to the cost-effective SaaS model. One of the key benefits of SaaS is the lower upfront cost, which results in lower entry barriers for customers looking to acquire software applications. Moreover, customers do not have to fret about maintenance and upgradation since they are taken care of by the vendor, enabling them to focus on business processes and cut down on the size of their IT teamsomething which managements are rooting for.

Contrary to perception, SaaS is becoming a favorite with everyone. This time too, excluding one large enterprise, the remaining three CIOs come from SMBs who have adopted SaaS; and all of them are using SaaS extensively. A validation of our belief that in the current slowdown SaaS is gradually moving out from the shadows to occupy centerstage.

Not For Biggies

N Varadarajan, GM, IT, Madras Cements

The SaaS model is gradually becoming significant in the enterprise computing space, particularly for small and medium organizations. It promises lesser TCO and greater RoI. SMBs are increasingly driving the adoption of SaaS, driven by ease of deployment, flexibility, scalability, and predictable pricing models, says N Varadarajan, GM, IT, Madras Cements.

These days there is a definite shift toward integrated, enterprise level software applications such as CRM, ERP, etc. In the past, while large organizations deployed full-fledged ERP applications, the smaller ones were left with no choice owing to heavy cost and manpower implications of such on-premise models. Says Varadarajan, With the emergence of SaaS, SMBs can now empower themselves with the same quality of applications which was once the domain of big enterprises. Mid-size companies can easily adopt SaaS which gives more or less the same benefits as a full fledged ERP but obviously at a fraction of the cost.

However, Varadarajan is cautions on the limitations of SaaS. For instance, SaaS is not suitable for large organizations. The key factor is the number of concurrent users of the system. SaaS is suitable only when this number is small. However, despite limitations its an innovative business technology with significant benefits coming from the absence of the client/server software installation or maintenance, he says. He adds, While SaaS can be deployed in minutes, it requires months to deploy an on-premise application. In addition, the global availability of SaaS makes it more attractive. The functionality is available from anywhere, anytime on the Internet natively, says Varadarajan.

While cost is certainly one of the considerations, before taking the plunge, there are other critical considerations that the CIO has to keep in mind: information security, availability, and service levels. In addition, the CIO also has to keep in mind levels of complexities of his business processes as well as customization required, since the SaaS model may not permit too much customization. Another important aspect to consider is the credibility and experience of the software vendor in delivering such applications.

No Compromises

Dinesh Victor, MD, SIP Academy

A children skill development academy based out of Chennai, SIP Academy India, has presence in more than 220 centers across nine states through channel partners who manage the operations in their region. Being a geographically spread organization, the company was on the lookout for a comprehensive and integrated online solution that would enable them to independently handle multiple area partners with an overall view on the day-to-day sales. We were also looking at a solution that would enable us to track and reconcile inventory on a real-time basis from multiple locations and evaluate the performance of each learning center, and generate reports on key operation parameters, says Victor, MD, SIP Academy who also overlooks the IT functions in the company.

Being a mid-sized company, SIP did not want to invest upfront in IT and hence went for a SaaS model. The company opted for Ramco On Demand ERP suite comprising book keeping, inventory management, accounting, MIS, purchase, receivable, and sales and shipping. With this solution our parent company and area partners are able to transact their business using the same application, resulting in better understanding and improved overall efficiencies, says Victor.

Victor feels that SaaS is an excellent technology for SMBs which can automate a whole lot of processes and improve operational efficiencies. Moreover, with no investments in IT assets, the companies do not need to budget a significant capex.

For any SMB, IT deployment is challenging because of unstructured IT policies and lack of a dedicated IT head. SIP also faced such challenges like training its users to the new technology and enabling them to move to a more structured IT. We managed all these challenges by careful planning and phased deployment that has resulted in the overall success of the SaaS deployment, says Victor.

Yes and No

KB Singh, head, IT, BSES (a JV of Reliance Infrastructure

Defining Software as a Service, KB Singh, head, IT, BSES says its a software delivery model wherein a software vendor develops web-native software, hosting and operating the software over the Internet for its customers. At Reliance we are always cost conscious and therefore are using the SaaS delivery model in our present organization such as Lotus Notes Mail and SAP with support from a centralized site on our own through a corporate initiative. And the SaaS model seems to be working fine for us besides being economical with less headache, he says.

Any organization looking to expand can opt for this model since this is definitely economical in all terms. Listing the benefits of SaaS, he says that considering all applications are hosted by the service provider, investing in expensive infrastructure is no longer required. Moreover, service providers implement a multi-tenant architecture implying that the cost of all software, infrastructure and expertise is shared by a large number of customers improving implementation speed and cost effectiveness over a standard ASP model.

At BSES too, the SaaS model has been adopted owing to several key benefits mentioned above like low cost of operations, cost-effective infinite scalability, increased accessibility and productivity, improved security, and platform independence.

As someone with considerable years of experience behind him, Singh though is cautious in his recommendation of SaaS as a preferred delivery model. I would say yes and no both since a lot depends on the scale and size of the organization, the kind of business it is in, and most importantly, I would say it is one of the ways to optimize your TCO. However, our experience has been good and so has been for many others as well. Singh goes on to quote Gartner which says that SaaS will account for 25% of new business software by 2011, up from 5% in 2005 while line-of-business executives have been the primary acquires of SaaS. But it is vital that CIOs have a serious look at it before it becomes a trend in itself.

Counting The Blessings

Sunitha R Jadhav, Cio & director, Alp Management Consultants

As the CIO of Alp Management Consultants, Sunita Jadhav made a decision to move to the SaaS model around a year back and she hasnt regretted her decision for even a day. The adoption of SaaS was a great decision and a major reason for getting good amount of business even in the slowdown. SaaS has proved to be very productive and it has given a big boost to our business. It has helped us to cope with the global meltdown, says Jadhav.

However, Jadhav is not sure how the model would have worked had she implemented it right in the middle of the slowdown. Every new thing takes its own time to settle in. And if supplemented by good processes and orderly implementation, then there is no reason why it shouldnt be successful, she says.

One reason why she is able to derive tangible benefits from the SaaS model is because she implemented it a year back and it is now fully operational and functional, thus yielding great results.

Apart from the one year experience and usability, Jadhav finds the SaaS model useful in team tracking exercises. According to her, the model has ensured business continuity and has made it extremely easy for her to track the entire team and their functions on one big virtual screen. Thanks to this model they can now track team positions, customer interactions, proposals, etc, efficiently.

In terms of costs too Jadhav finds SaaS very handy. She says that it enables them to analyze everything from billings to the various businesses of a potential client and a complete track of their competitors. A lot of our performance analysis happens on the basis of SaaS. And not just team performance but also of the services that we offer and our client base, she adds.

However, Jadhav agrees that not many SMBs are keen on adopting the SaaS model. Maybe they are not able to understand its cost effectiveness, she says. She also believes that there is not going to be a major spurt in SaaS adoption in the times of meltdown because of its cost and also because people know that it doesnt always shows immediate results.

So SaaS is a blessing in meltdown times for those who already have it up and running, but might not be one for those looking to adopt it now.

Stuti Das, Mehak Chawla & Shrikant G
stutid@cybermedia.co.in

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