Borrowing a concept from the old mainframe days, SaaS pretends to be a new concept but really harkens back to the lease or “pay as you go” concept. What’s different is the delivery vehicle-the Internet. According to John Chlopek, CEO – North America, CSB-System International, the SaaS model commands commitment from both vendor and client. The vendor must be comfortable with the transition away from the standard software licensing model in addition to budgeting for the investment in infrastructure and support that is required to host client solutions. The client has the potential to utilize an enterprise solution as a “utility,” thus reducing the initial capital expenditure (hardware/software) typically required for the system use. On the downside, says Chlopek, the client must cope with the fact that its data will be hosted at a remote facility in comparison to, for example, a locally hosted client/server environment. Fee-based training is required to properly use a SaaS solution just like a locally-hosted solution.
According to Johann Heydenrych, director of industry solutions at itelligence Group, SaaS is an absolute reality for the future. The revenue band of companies participating in ERP selections continues to get smaller, and those companies cannot pay a substantial amount of money up front for a software implementation plus hardware, hosting and long-term support. The trend is clear, and SAP has picked up on it with its Fast Start product. The customer pays a fixed, monthly fee that incorporates the initial software costs, implementation, hosting costs and the long-term support.