Posted in Operations & IT Articles, Total Reads: 2328
, Published on 16 January 2013
There has been a lot of hoopla about cloud computing lately. Every organization wants to jump on the “cloud”. Many have already made the change and others are keenly looking at it to solve their Information Technology related problems.
Cloud is a new IT service delivery model. Today, we will look at Software as a Service (SaaS) delivery through cloud computing.
Previously, organizations hosted their critical applications like ERP, e-mail etc. on their own servers (on-premise model). This generally meant having dedicated workforce for maintaining these servers 24X7 because if these servers went down, the organization would typically come to standstill (e.g my previous organization hosted outlook mail on its own servers and one fine day when these servers went down, employees couldn’t work for the whole day!)
Contrast this with the cloud model where the critical applications are hosted on the cloud ( on server farms maintained by dedicated companies with relevant expertise and the organization using the service is connected to the server farms through a dedicated internet link). All complications of keeping the services up and running is transferred to the partner and the organization using the services gets a guaranteed minimum performance level through SLAs and the best part is it pays only for the amount of resources it uses (“pay as you use” model).
So, what if my previous organization had hosted its email service on the cloud? First, it wouldn’t need to buy and maintain servers in which it had no expertise, as a result the failures would be less. It wouldn’t need to employ a dedicated IT team for maintaining the servers+applications and it would be charged on pay by use model, meaning there would be great cost savings!
How can it help Indian companies to gain competitive advantage?
While the cloud model of IT service delivery has several advantages for all types of organizations in India - large or small in several contexts, SaaS can be used either for delivery of services or for their consumption. Service delivery model is important for companies using SaaS to deliver outsourced services of MNCs from India, the service consumption is relevant for Indian SMEs, where the IT budget and expertise is limited.
For example, using SaaS model, a firm based out of Bangalore can provide digital publishing solutions to digital publication houses in USA. This has opened up entirely new revenue streams for Indian outsourcing providers who can provide expert services to clients at low cost. The Indian IT biggies are already offering SaaS as a part of their portfolio (Infosys offers several SaaS platforms like iEngage, CommerceEdge, SocialEdge etc.), even SMEs are successfully using it for novel services, some examples:
● Impelsys Inc offered its SaaS-based flagship iPublishCentral solutions to Vilnius Gediminas Technical University in Lithuania. iPublishCentral helped the university offer over 300 eBooks to its readers, through the portal.
● TravelCarma, a small firm based in Gujarat, offers travel solutions in Frankfurt.
For Indian SMEs low on IT budget and expertise, cloud offers a cost-efficient way to use enterprise grade IT services. A couple of scenarios:
Microsoft Office enterprise edition costs almost 18k per license and Sharepoint server which enables collaboration features like email, calendar, messenger, office documents etc costs lakhs in license plus the cost of hardware and maintenance. Google Apps provides all these services( Gmail+Google Docs+Google Calendar and much more on on custom domain) as SaaS with a 99.9% uptime at a cost of $5/user/month or $50/user/month. All the SME needs to maintain and pay on ongoing basis is a good internet connection, everything else is taken care of. The collaboration features allows employees to work more productively and cuts down travel costs, giving a huge competitive advantage.
Though an ERP package makes a good case for an SME to help solve its accounting headaches or keep track of huge number of raw materials and finished goods going in and out, an ERP package is generally too costly for SMEs along with the headache of maintaining servers and all. However with SaaS offerings from the leaders of ERP like SAP, Oracle and even the smaller players like Tally and Ramco, SMEs can pay on per user basis at very low prices, thus getting a competitive edge in managing inventory and greater transparency and insight into business accounts.
The services available through SaaS model today are not limited to office suite, email or ERP. Companies can practically use SaaS for all of their IT needs including accounting, collaboration, and content management, CRM, HRM and Management Information System (MIS).
And these are only some perspectives on how SaaS is helping Indian organizations gain competitive edge and at the same time increase market base and gain new revenue streams. Cloud computing is a paradigm changing shift which is going to impact organizations in several ways. With Gartner predicting worldwide revenue from SaaS delivery to cross $14 billion in 2012, and $22 billion by 2015, the future definitely looks bright. As the technology progresses, many of SaaS related issues like data security risk, true cost-effectiveness and the difficulty of interoperability with other systems will be ironed out which will further speedup consumption. SaaS must form a part of IT strategy of all companies, big and small.