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Driving Forces Behind SaaS Adoption In The Enterprise

Transcript:

Way back in 2001, the founders of Storagepipe Solutions saw the potential of Software as a Service, or what we now know as SaaS.

Although the terms “SaaS” and “Cloud Computing” were still several years from being invented, Storagepipe saw that this delivery model offered overwhelming benefits for both IT executives and service providers. And it was only a matter of time before the world woke up and embraced the technology.

With the traditional enterprise software model, companies would purchase and own their systems and hardware. This usually required months of planning, significant capital investment, and difficult buy-in from other departmental heads. After this, the organization had to incur further costs related to maintenance, energy consumption, server room resources, upgrades, and software licences.

Once they made the purchase, they were locked in… even if the implementation found to be a poor organizational fit… or if conditions changed to make the new system obsolete.  This presented a significant risk, considering the high failure rate of enterprise software initiatives.

But with SaaS and Cloud computing, you only pay for the software and resources that you need. All of the maintenance burden gets shifted to the cloud provider, who is in a better position to capitalize on high-volume discounts and economies of scale that come from maintaining a multi-tenant datacenter environment.

For enterprises, cloud computing has very low entry, exit and switching costs. This greatly minimizes the amount of business risk that companies incur when implementing new software solutions.

Cloud computing also offers a number of unique benefits for service providers and software developers within the enterprise space.

In the past, selling big-ticket enterprise software and hardware meant high marketing costs and long sales processes.

By selling cloud services instead, the cost-per-sale is much lower due to the lower barrier to entry. And because customers rent on a monthly basis, there is stable recurring month-to-month revenue stream.

Software vendors love SaaS because Cloud software can’t be pirated. And as more users sign up, margins improve because total resource usage becomes more efficient.

But despite all of these great benefits, it was still a number of years before the market really began to eagerly embrace SaaS.

So why are companies just now starting to take notice? It’s really a mixture of many different variables that slowly came together to form a critical mass.

Within this presentation, I’d like to outline some of the key factors that have contributed to the recent growing trend of SaaS adoption within the enterprise.

Popularity of the cloud

Organizations are much more trusting of the Cloud than they were 10 years ago. Companies saw that risk-taking early-adopters have been using the cloud for years with almost no major problems, and that has inspired other – more conservative – businesses to jump aboard and reap the benefits of Cloud computing.

Big Names

Another factor that has influenced the acceptance of cloud computing has been the fact that the biggest names in the industry are now endorsing SaaS. All of the major enterprise players – including IBM, Microsoft and Oracle – are now endorsing enterprise cloud computing.

Green Computing

As processors continue to pack more power into a smaller space, energy consumption and cooling are becoming key concerns for IT administrators. This means higher energy bills and costly server room upgrades.

Due to their efficient resource usage, storing servers in the cloud can greatly reduce per-capita energy consumption and help companies extend the useful life of their expensive internal server rooms.

Provisioning

SaaS and Cloud service can be purchased on an as-needed basis, and new users can be added or deleted within minutes. Also, the datacenter can be rapidly scaled or moved to another location by simply filling out a form on a web site. This makes it incredibly convenient and economical for business owners and IT executives.

Support Costs

Because SaaS applications are always current, organizations don’t have to waste money supporting old versions of applications. And internal support calls are also reduced since end-user technical help for is supplied by the software host instead of your internal IT staff.

Capital Investments

With installed software, companies have to over-spend in order to purchase under-utilized resources like server room space, processors, hard drive space and ram. But when applications are hosted in the cloud, you only pay for what you use and buy more when you need it.

Poor Economy

During uncertain economic times, companies will look for ways to remain flexible so that they can adapt to change and quickly act on new market opportunities. This is important since unstable economic times are when companies are most likely to merge or break up into smaller units.

Compliance

SaaS vendors are usually very knowledgeable and experienced when it comes to deploying applications that comply with regulations like HIPAA, Sarbanes Oxley and PIPEDA. And their facilities are frequently audited.

SaaS providers can also provide low-cost temporary access to tremendous server processing capability for electronic discovery.

Mobile Computing

The rapidly growing popularity of smart phones and tablets means that employees will be working from multiple devices simultaneously. In order to keep these devices synchronized, work will need to be done through a single centralized system. SaaS is well-suited for this purpose.

Service Oriented Architecture

With Service Oriented Architecture – also called SOA – business applications are structured as a series of components which can be modified, reused or combined with other parts to quickly create secure, compliant and consistent customized business applications

You can combine data from multiple internal systems into a single interface, or even allow trusted third-parties to integrate components of your systems into their own in-house applications.

A good example would be a supplier who could automatically generate purchase orders based on your company’s warehouse stock levels.

Security

SaaS vendors typically have very robust security in place, and they don’t charge their customers for it. Also, since SaaS stores data off of the local client machine, the risk of a privacy breach is greatly reduced in the event that a computer or mobile device is lost or stolen.

Historically, security and privacy have always been the primary sticking points when it came to convincing enterprises to trust SaaS. But over the years, there has been a lot of progress in this area, and customers have also become much more knowledgeable when it comes to cloud security.

In a future presentation, I’ll discuss cloud security in more detail.

These are just a few of the major trends that have pushed SaaS into the Enterprise.

If you’d like to learn more about how your company can leverage the power of Software-as-a-Service, please visit Storagepipe.com for more information.

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