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Companies realise SaaS could loosen the purse strings

August 28, 2009 • Software

Hubert Wentzel, Divisional Director, EOH Consulting, says there is no doubt that the current economic climate has changed customer behaviour. Cash is tight and, as a result, many IT projects, although budgeted for, are in limbo. Trends show a definite move towards funding these projects as operating expenses rather than capital expenses and this, Wentzel says, makes the case for Software-as-a-Service (SaaS) very strong.

CIOs are today looking much more aggressively for opportunities to use both open-source software technologies and third-party application hosting, delivery and management services, like SaaS. What’s more, Wentzel says, there’s strong evidence that managers are a lot more savvy today regarding the role that IT plays in keeping business moving, enabling growth, and driving efficiency than they were in previous recessions; and they’re actively promoting business plans that they know depend on the strategic use of IT.

“Companies need tools to meet the demands of the business and its customers. In our experience, solutions that take time to develop are decreasing while customers are expecting higher functionality at lower total cost of ownership. Without an efficient infrastructure and seamless connectivity, none of these targets can be realised and this is why businesses are increasingly looking towards SaaS which allows them procure a best-in-class computer environment that is more efficient and less expensive than creating their own. SaaS allows organisations to focus on the real technology and business issues that drive success.”

SaaS means that there is no software on the computer. Applications are delivered over the Internet and can be accessed anywhere, anytime, with a browser. The SaaS model is easy to use, lowers cost, does not have the maintenance and upgrade hassles of traditional software, and does not require the large up-front investment in software and hardware and is, therefore, lower risk. Since companies generally pay on a per-user, per-month basis, licences don’t go unused and shelf-life becomes a problem of the past.

Wentzel says the value proposition with SaaS is straightforward: SaaS offers an easier way for companies of all sizes to buy and use the kinds of tools that previously were too complex and required too much upfront investment, for all but large companies, that is.

“Despite the fact that IT budgets have been done and accepted, we are experiencing a wait-and-see approach by some companies, given the uncertainty out there. With South Africa lagging the US economy by at least three quarters, I believe we are yet to see how badly the industry will be affected here,” Wentzel concludes.

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