Why is SaaS Framework gaining a Disruptive Momentum in the Software Industry?
The businesses are no longer buying on-premises software solutions while the vendors are focusing more on the SaaS model. What is beneath this shift?
SaaS is an acronym for the Software-as-a-Service model in cloud computing that shares similarities with ASP (Application Service Provider) and on-demand computing model. Cloud computing is broadly classified into three categories, which are IaaS, PaaS, and SaaS. The traditional on-premises model required companies to purchase a one-time perpetual license for the software, maintenance fees, and entire infrastructure was the client's lookout. On the contrary, SaaS is a multitenant architecture where the vendor provides access to the application through the network as per SLA on a pay-as-you-go basis.
Key Differences Between various Frameworks of Cloud Computing:
- IaaS (Infrastructure-as-a-Service) provides the users with data storage and virtualization facilities along with networking that provides cost-effective, highly flexible, and scalable solutions with multi-user accessibility. It will slash the initial investment while allowing complete control over customization.
- PaaS (Platform-as-a-Service) is built over IaaS with the transfer of administrative functions to the vendor. The user can focus more on the creative aspects since the source code is readily available. This saves both time and money, along with providing vertical scalability.
- SaaS (Software-as-a-Service) enables the users to run the software over the internet browser without installing it. You can use APIs to customize further the application, which is one of the most powerful offerings over legacy software.
How will Cloud Computing Disrupt the Entire Software Market on the Nearby Horizon:
By 2022, 53% of the software revenue will come from subscription model (IDC), and 2020 will witness all new entrants and 80% of historical vendors offering subscription-based models (Gartner.)
These solutions will address a variety of problems faced by organizations, and we will have a look at the core business functions such as production, inventory management, HR, Accounting, Sales and Marketing, and Supply Chain in a nutshell.
The businesses in the manufacturing sector usually struggle with a shortage of information in production planning. They need data regarding the real-time production process and a total inventory of all the consumables, non-consumables, along with infrastructure facility availability for running operations smoothly. Using software tools will enable streamlining the coordination of multiple production facilities and processes with raw materials and assembly lines. Maintenance scheduling and labor planning are also coordinated with delivery cycles.
A company might use multiple warehouses at different locations and supply unprocessed materials and parts to various production facilities. This complex network of consumption and storage centers is simplified by centralized processing to enable scientific decision making, resource allocation, and effective utilization of resources. The collective optimization will reduce the inventory carrying cost, lags in the production cycle, and bottlenecks. Connecting every employee, process, and the material will result in a lower cost of operation and ease of management.
It is an omnipresent department, and using cloud automation will increase the frequency of capturing data, accuracy, and processing capabilities for operational, functional, and strategic use since this information is linked with finance. The use of ESS Portals and mobile app-based documentation will reduce the administrative overheads significantly. Online integration will empower the businesses in many ways, such as linking recruitment with web-based job portals, work-from-home policy, timekeeping through geofencing and geo-tracking, and help in exercising better control over the human resource policies while developing an accountability-driven and ethical work culture.
The accounting system holds great potential with most anticipated benefits, including the integration of payroll software with online banking-enabled disbursement, making JV entries of the expenses made in lieu of employee compensation, ramping up digital reimbursement processing for sales associates, and processing. All the aspects concerned with human resources and their monetary transactions across the company locations. Payment gateways and email are also linked to accounting software for electronic correspondence of billing. Statutory filings are generated and uploaded directly as per format from HR data. These functionalities are available only in the over-the-cloud solutions.
Sales and Marketing:
Having a CRM (Customer Relationship Management) Software which can be accessed from any device without time restrictions will help the salespeople in making communication effective and efficient. All client details, business transaction history, grievances, past interactions and quotations, outstanding bill amounts feedbacks, and product details can be accessed on the go using such tools. The system will also help in marketing by integrating CRM with the leads generated from all sources. Social Media Marketing tools will enable higher website traffic and better engagement with the clients than traditional marketing channels since the clients can approach the sales executives without any timing or place restrictions through online marketing activities.
With the help of a SaaS-based supply chain management system, the companies can track down the exact location of the goods in transport, lead times, expected inventory handling requirements as the updates regarding new orders, current in-process materials, and dispatch status is available on a centralized basis.
A quick recap:
The SaaS framework will disrupt the software industry because it is equally beneficial to both vendors and their clients. The vendors will get recurring revenue streams, better product updation control, and reduced risk of piracy. On the other hand, the customers will enjoy a far lower cost of ownership for better software, interoperability, faster updates, flexible payment options with scalability, and there would be no need to hire in-house IT staff. They would get better solutions at lower prices with the competitive business advantages being a cherry on the top!
A significant reason for this disruption can be attributed to the technical benefits of multitenant architecture, which helps in keeping the costs lower while allowing extensive customization for client copy. As an organization, you can benefit from SaaS-based software in all business functions as they provide a seamless flow of information from all data capturing channels and enable centralization of processing. The system will be tailored as per customer-specific requirements making it unparalleled in terms of flexibility, utility, and effectiveness.
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