Saturday, April 4, 2009

Software as a Service Has Come of Age

Here's why......In the current economic downturn the interest in alternative methods of financing solutions has increased. I hear repeatedly that capital budgets are evaporating and facilities are looking for new an innovative ways to finance innovation.

Software as a Service delivers the technology and innovation but does so in a different way putting less strain on capital finance requirements and delivering more value for money in a shorter period of time. In fact Gartner wrote a paper some time back (TCO Comparison of PCs With Server-Based Computing - subscription required) that demonstrated that the savings when considering the Total Cost of Ownership (TCO) can amount to as much as 48% relative to comparable fat client software installations. So how do these advantages accrue

Upfront Costs are Lower
The upfront costs to get technology installed and implemented is always going to be lower. There is typically limited technical requirements since the majority of the heavy lifting is done in the service providers environment in their technology center. Providing a good broadband connection with as the require resilience is typically the main cost

The savings mount up since payment for expensive licensed software can all but disappear. Depending on the application imaging the often forgotten add on costs of Microsoft Office and other additional licenses required when you purchase and run a fully fledged system and this can be multiplied many times over for each of the access points required. The model essentially lease the software on a “pay-as-you-go” basis. Not only is this pricing model more economical, it’s easier to predict and manage, and affords simplified financial reporting: Rather than trying to predict the funds required to pay out large chunks of capital for upgrades or replacements the ongoing costs is very predictable and tied to usage. Some call this conversion of CapEx to OpEx and will become increasingly important int eh current credit restricted market and cash strapped facilities. It also makes for inexpensive start up to provide access to a large number of users does not require huge capital injection.

Reduced ongoing costs
Often forgotten in the overall assessment of typical local software purchase and installation is the ongoing maintenance – not restricted to a single “maintenance” fee which is in the order of 10 – 20% of the initial investment but also needs to include the other software upgrades to the systems, equipment replacement and the inevitable complexity of troubleshooting.

Faster time to Deliver Solutions
In the standard purchase and own methodology setting up a new system involves many steps and is time consuming and costly. With professionally delivered services setting up a new system for a site is a rapid process. The SaaS capitalizes on the specialized staff who focus their energies on optimizing and scaling a system to ensure availability and delivery that is integrated into customer environments. With the solution ready scaling and delivering a new site can be extremely rapid getting sites up and running quickly benefiting from the solution and technology. Local staff focus on delivering service to their customers while the technology and the heavy lifting associated with getting it up and running is done by the SaaS vendor who has skills, staff and resources necessary to do so quickly and effectively
In addition given the push to roll out healthcare technology encompassed in the stimulus package showing benefit quickly will be essential to maintaining the momentum and flow of funds. Investing in large scale projects that have yearlong implementations and extended time frames before they can be installed and show any results will be less desirable and anything able to deliver quickly will be very attractive, especially when linked to low up front investment costs

Faster access to new technologies
In the rapidly changing world the risk of obsolescence is still high and being locked into a large up front investment that is obsolete before it even has time to be fully rolled out is an ever increasing risk. Not only does SaaS mean customers get faster access to new software and features but also provides customers rapid access to new and “trial” applications as they become available.

Enabling the Virtual Access
SaaS solutions are ideal for facilitating geographically distributed application needs and in cases of home access or remote accessing multiple sites this can be delivered quickly and cost effectively. Even in the case of local installations and sites access is often provided on thin client environments and this requires significant processor and server infrastructure for heavy weight solutions. In the SaaS model the processor power is shifted to distributed locations specialized in delivering power necessary for each application relying on broad band communications to link these environments.

SaaS providers are engineered from the ground up to scale cost rapidly and effectively. Careful monitoring and management optimizes the resources to ensure availability of the solution and has built in capacity to meet unexpected spikes in needs without disproportionate investment requirements in technology infrastructure locally. SaaS also delivers built in geographic redundancy for an overall more reliable service performance than a traditional customer managed premises solution.

Better analytics and reporting
With the focus on delivering the service comes the inevitable requirement by SaaS vendors to monitor and optimize the application and the customer interactions with it. All this monitoring delivers a level of reporting capabilities that can provide detailed insights into customer habits and even performance that can be packaged into useful reports.

Better Management of Access
Hosted solutions also offer the ability to apply business rules across the whole center limiting access to specific times, locations and even intelligently routing work and information to those who are active based only on their availability. This is flexibility in delivering the solution and then linking the resources necessary to work with the application in the case of solutions that can be staffed outside of a facility

Improved customer satisfaction
All of the above elements combine to create a radically improved customer experience. By virtualizing the solution access is improved, new features are added quickly, problems prevented though intensive monitoring and maintenance and customers free up their resources to focus on their jobs rather than worrying about the applications

Guaranteed 24x7, 365, uptime
Fro many facilities it can be hard to relinquish control of precious IT assets to a third party. But rest assured today’s service based solutions have facilities fully-backed up and redundant and use state-of-the-art security to protect sensitive information. These service providers know that just one failure or breach could spell real problems for their business, so it’s in their own interest to protect your data.

For the same reasons today’s service providers have a vested interest in ensuring that their applications meet their customers’ needs: If the application performs poorly or turns out to be a bad fit for the customer’s business, the service provider loses a revenue opportunity. And because SaaS can be turned on and off just like a utility, it’s relatively easy for organizations to switch to another provider in a short amount of time. That gives the service providers all-the-more incentive to roll out tested, reliable applications that help companies meets their business goals. In fact SaaS providers are fighting for your business every day because if they don’t continue to deliver excellent service and improve their offering customers will stop using the solution and the SaaS provider will lose revenue and customers.

It took a while for SaaS to live up to its promise in no small part due to the challenges in the past with services and connectivity. But reliability of today’s platforms and the speed of today’s networks in particular have answered the remaining resistance points and it appears that SaaS is finally gaining serious traction.

So who's out there really (not standard software that has just been installed and hosted in a data center and called SaaS) offering SaaS in healthcare? How have your experiences been with SaaS? Let me know and post your thoughts

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