Life Beyond CRM: SaaS Grows Up

Aug. 10, 2007
On-demand software expands in function and application across the enterprise.

A decade ago, SaaS didn't even exist. When investing in IT, manufacturers were either shrink-wrapped into expensive out-of-the-box solutions or tethered to custom installs with consultants camped out on site just to keep IT humming along hitch-free.

However, about eight years ago, a revolution in software began when, a provider of customer relationship management (CRM) solutions, kicked off the Software as a Service (SaaS) sector.

As Doug Timmel, director of manufacturing solutions for on-demand software provider Bluewolf Inc., relates, "Increasingly companies have come to realize that it's much easier and more cost-effective to use Web-based SaaS."

With 30 years of manufacturing under his belt, Timmel saw the IT cost/benefit ratio changing drastically as SaaS made the leap into the manufacturing sphere. "Consumer companies saw the opportunity first," he admits, but adds that industrial manufacturers such as DuPont and International Paper are realizing "the new way to deliver software is easy to use, easier to install, flexible and cost-effective."

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Executives at Oriental Motor U.S.A. are realizing all these benefits, and more. The controls, drives and motor manufacturer recently implemented a customizable SaaS sales solution from InfoStreet that reduced a number of portals and parallel systems down to one user interface based on the demonstrated business need of each user. "We're able to provide information in one portal and allow different features by login," says national distributor manager Dan Heibesen. "The ability to enable and disable functions on the menu was key."

Lately, the SaaS storm has been brewing as talented developers and entrepreneurs see the potential for this new delivery system in almost every area of IT operations -- and this building of momentum isn't just coming from the developer side. Timmel points out that another big reason to make the SaaS switch lies in the boardroom's budgetary battleground.

"While traditional on-premise software is considered a capital expenditure, on-demand software is typically sold as a subscription, which means corporate buyers can account for it as a maintenance expense. By employing the SaaS model, manufacturers don't have to budget scarce capital to software expenditures," he notes. "With tight capital expense budgets, this is a benefit that buyers can use immediately."

As SaaS stands today, companies across many industries are reaping many benefits across various aspects of their business models. Display and exhibit manufacturer Orbus, for instance, implemented an on-demand portfolio management solution from 3 Olive that product development manager Steve Westcott says "allowed us to avoid the typical infrastructure costs of hardware, software and consulting assistance" without losing any functionality. "We track everything from concept stage, prototyping, development, marketing, piloting to product launch," he says.

Mark Jeffries, chief engineer at hardware manufacturer Austin Hardware, likens the flexibility and lowered resource investment that his team gets with their SaaS product development solution from eProject to a toe in the water, rather than "a belly flop off the diving board."

"Before, we could spend 50 hours or more on a project before we even did basic research or had a commitment from a customer," Jeffries relates. "Now, we have more insight into our projects and can be more certain that every man-hour we spend increases the likelihood of success."

These days, SaaS even addresses enterprise resource planning (ERP). Although SaaS is mostly seen as an alternative to ERP-scale software expenditures, companies like Timmel's Bluewolf have stepped into the breach with SaaS solutions that integrate legacy software and enhance, not detract from, previous big IT investments.

According to a recent Gartner study, $8 out of every $10 are considered "maintenance money," not directly contributing to business process improvement or helping further competitive advantage. Timmel sees all that is changing for the better these days, with the rise in SaaS adoption shifting the focus to where it belongs -- improving business without the burden of infrastructure and unnecessary costs. "Consumer companies learned to embrace SaaS early," he says. "Now it's manufacturing's turn."

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