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There was a time when Software-as-a-Service (SaaS) was considered far out on the horizon for Indian companies. Not anymore.
By Faiz Askari
It has still not achieved its high place among the so-called paradigm-shifting technologies, but SaaS is gradually emerging as an attractive model to experiment with. And even though cost savings is a prime mover, it’s no longer the only reason why companies are thinking of it -- now, many IT heads are looking at farming out some or all of their application needs from the perspective of ease of use and management.
The trend is catching on more in the SMB space than amongst large enterprises, who already have sizable investments in IT. For an SMB such as Raman Fiber Sciences, however, SaaS provides lower upfront cost without the hassles of managing a complex IT system. Says Managing Director Aroon Raman, “Our decision to subscribe to Microsoft’s Hosted Dynamics AX offering was made after extensive market research. We wanted to use ERP not only for our business essentials, but also for manufacturing and project management. While not compromising on functionality, we were looking for lower upfront investment along with scalability and outsourced operational management.” And the company is happy about the returns it got from its path-breaking IT initiative: it has streamlined its business processes, including R&D and pilot production of components, without much initial investment.
Another company that is actively looking at the SaaS model is Delhi-based Jagsonpal Pharmaceuticals, which is in the process of expanding globally. Though the company has not yet made a final decision, Prakash Pradhan, Jagsonpal’s IT Head, says that the hosted model seems good as he can get an ERP solution at low cost and avail all possible utilities of an ERP while spending negligible time on implementation. The company is evaluating the feasibility options to go for a hosted model and wants to ensure that it gets the best bang for its buck before taking a final call. Pradhan has one strong feedback to give to prospective vendors who pitch their solutions to his company: Don’t just think about promoting and describing the products, but try and relate with the business issues that the company faces.
That’s precisely why SaaS might work better for mid-sized companies: they can choose to go with it and if they later find out its not working to their advantage, they can easily pull the plug on it without sinking too much money into buying computing gear upfront.
Another boost for SaaS for SMBs may come from large vendors, many of which are looking to connect their smaller suppliers and distributors or dealers.
An example is Hero Honda, which is thinking of connecting its 650 dealers and 400 suppliers spread across the country. According to Avnesh Jain, Senior Systems Manager, Hero Honda, “Although we don’t need hosted solutions for our own operations, we are thinking of creating a hosted ERP kind of offering where our vendors and dealers can automate their entire operations. This would include automation of their financials, CRM, HR, etc.”
Making SaaS work
Initially, there were several hiccups impeding the implementation of SaaS (when it was called the ASP or Application Service Provider model). Connectivity was poor and expensive and vendors in the space had half-baked solutions rather than mature offerings that users could trust. All that is now changing for the better.
According to Satish Sayal, Executive Vice President and Group CIO of NIIT Technologies, “The services are accessible by the end users on a 24/7 basis. Whether the service is on a dedicated or shared platform, the goal of SaaS is to shift responsibility for delivery of the software’s functionality to a service provider rather than it residing with the end user’s organization.” Another good thing about SaaS, he adds, is that the SaaS provider is responsible not only for the performance of the software but also for its maintenance and upgrade as well.
Describing how the model works, Sayal says, “The SaaS model involves hosted software based on a single set of common code and data definitions that are consumed in a one-to-many model by all contracted consumers, at any time, on a pay-per-use basis, or as a subscription.”
Sushant Dwivedi, Business Group Lead, Microsoft Business Solutions, Microsoft India, says that the availability of ERP on a hosted model will make a lot of SMBs change their attitude toward these applications, because they do not need to have a large IT infrastructure of their own.
While ERP vendors are perhaps taking the lead in India, other business applications such as CRM are also up for grabs. One such player in the space is Sage Software, which recently launched its hosted CRM service for as little as Rs 33 per user per day. Sage offers an added incentive to those who are skeptical about giving away their control of the software. Says Thomas Abraham, Managing Director, Sage Software India, “The advantage we extend is that customers can also move the application on-premise over a period of time.”
Abraham avers that such a model can also help a company decide whether the hosted application is the right fit for it. “One can test the waters with minimal investments and decide how CRM can work to the organization’s advantage. This becomes an added advantage for any CIO,” he says.
Take vCustomer, for instance. The company is offering a customized solution for the retail space. According to Sanjay Kumar, CEO, vCustomer, “While analyzing specific needs of the retail customers, we have designed a Customer Management System, which is a composite of many critical value adds to the retail organization. Beyond regular CRM offerings, we tried to optimize the usability and manageability aspect along with value-adds like IVR, SMS, and analytics order management."
The Challenges Ahead
There are several challenges ahead that still need to be overcome before SaaS implementations become a mainstream reality rather than a few scattered showcases. Some industry analysts are skeptical that the initial cost savings offered by the on-demand model will fritter away with time, as companies gradually pay more for maintenance, upgrades, or scaled up versions (as businesses grow; the computing needs would grow too). Others point to the difficulty of changing one’s mindset – and most companies’ mindsets are still stuck on ‘owning’ all their computing resources.
Then there are concerns raised on the security front as well. Many IT heads and CIOs have time and again mentioned that their intended SaaS initiatives are held back because of existing concerns about security breaches.
For management buy-in, more successful examples of SaaS must come through that others can easily follow. In fact, the SaaS story has only just begun and a lot of action will follow in the next couple of years before one can give a reasonable verdict. Watch this space for more.
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