Editorial: The New Technology Wave – Software as a Service

Editorial by Alberto Gabbai
Chairman of the Board of Cezanne Software

Seven years ago, Cezanne Software started exploring the US market. It wasn’t long before we realised that the market was pushing toward web-based architecture applications. In other words, if your application was still client-server you weren’t in the game. And, the web-based technology wasn’t all that great back then; there were problems with performance and security. Even so, users were adamant in their refusal to take into consideration anything that wasn’t on a web platform. Total cost of ownership (TCO) and the ability to access the application remotely played a big role in this push.

Europe, on the whole, was more conservative and more inclined to look at application functionality rather than pushing for a new technology.

It seems like prehistory, yet it was only seven years ago, at the turn of the century. And now, here we are witnessing a new push toward a new platform. Software as a Service (SaaS) is beginning to play a big role in the American market, while it is still regarded in Europe as something only suitable for small companies or niche applications, such as CRM or recruitment boards.

Although SaaS still only represents a small portion of the entire software applications market, counting for only 2% in 2005 of the total US enterprise software, IDC’s projection puts it up to 5% by 2009. But some think that IDC is very conservative: a survey run by TripleTree places SaaS in 2009 at 40% of the total software applications market.

Why is the demand going in this direction? There are several factors involved, not all of which are financial.

1. The TCO is lower, as companies don’t have to buy or manage hardware or system software to run an SaaS application.
2. A monthly fee, with no initial investment in buying a licence, is more appealing for companies whose budgets are becoming smaller and smaller.
3. The IT department plays a lesser role, if any. This makes it easy for the HR department to choose the best fit, regardless of technology constraints or standards.
4. Deployment and configuration, as well as future upgrades, can be carried out with almost no end-user involvement.
5. The intuitive design of SaaS applications reduce the need for training to practically zero.

Then why are some companies (mostly American) moving aggressively towards SaaS while others (mostly European) are not?

One of the reasons is fear: specifically, fear of surrendering the management of an application to an outsider. Also, as was the case seven years ago with web-based applications, the technology is not completely there yet. Although we are getting close, zero-cost implementation and zero-cost training have yet to be achieved.

In the belief that the benefits of this new platform will drive the demand towards SaaS, we at Cezanne are working hard in this direction, and our SaaS user base is already growing at a fast pace, along with our in-house customer community.

                                                           

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