Super model: Energize and optimize your business with SaaS—and focus on “the important stuff”

Software-as-a-Service (SaaS) is proving to be a cost-effective way for companies to get the sophisticated business solutions they need to compete and grow without incurring the often high initial costs associated with purchasing and maintaining the applications and infrastructure.

By Peter J. Pearce, senior manager, Virchow Krause & Company March 23, 2009

For David Knutty, the decision to use Software-as-a-Service (SaaS) in his midsize, complex steel fabrication company was driven by the application’s functional fit to the business.

“We did not choose a SaaS solution solely based on the SaaS platform,” says Knutty, director of business systems for Stow, Ohio-based Wrayco Industries . “The decision to choose Plex Systems Plex Online [SaaS-enabled ERP] was multifaceted.”

SaaS is the business system model where an external vendor hosts the software in the vendor’s own secure environment, and manages and administers the back-end database and architecture. True SaaS applications are written from the ground up to be accessed through the Internet via a Web browser.

Since SaaS applications are architected for the Internet, the application’s performance typically meets and/or exceeds the performance found in traditional on-premise applications. With SaaS applications, the only software required is a Web browser to gain access to the application anytime, anywhere. This includes mobile devices—e.g., phones, PDAs, scanners, tablet PCs, and laptops—that connect to the Internet.

One of the key components of the SaaS model is a single-instance, multi-tenant design. This means all of the SaaS software users are accessing one database and one version of the software. Enhancements are continually made to the software, eliminating the need for costly and disruptive upgrade projects.

After implementing Plex Online, Knutty says Wrayco was able to focus its energy on improving the flow of product through its operations using the system’s intuitive and feature rich functionality. Although there are many benefits to the SaaS model itself, the software still needed to deliver business benefit.

“We are now able to track our product through our welding and assembly manufacturing cells, powder coating paint system, final assembly, and straight to our customer’s plants just by scanning the serial number after the milestone operations,” Knutty says. “Components are consumed, labor is reported, and quality data is captured in real time [via the] Web.”

Additionally, all of Wrayco’s business data is securely stored and managed by SAS/70 certified dual data centers that are owned and operated by the SaaS vendor.

“I used to worry about our data being protected, having the system slow down during mid-day backups, and performing system maintenance activities during off-hours,” Knutty says. “Now I can focus my energy on things that improve our bottom line. [And we] did not have to add any personnel to support and administer the application.

The smart seven (of SaaS) Wrayco’s experience with SaaS underscores

Economical . SaaS solutions lower total cost of ownership (TCO) by reducing infrastructure investments, operational costs, and personnel requirements—eliminating the need for future upgrades. Also, since the onus is on the SaaS vendor to deliver reliable and secure services, companies can set a predictable and accurate budget that won’t include unexpected maintenance costs. It is a great solution for companies that require sophisticated software to compete and grow, but don’t want to make the large-scale financial investment typically required to purchase their own systems.

Functional . As SaaS solutions gain popularity, products and features are in development, with a number of functional point solutions now considered “best in class”. Enterprise SaaS solutions often meet and exceed the functional requirements of most businesses.

Secure . SaaS applications are designed with security in mind. SaaS providers provide ironclad firewalls, automated security sniffers, physical security features such as concrete walls and biometric control systems, data management centers—all subject to regulated certification measures. In addition, security professionals constantly monitor security and implement new measures—features and skills that most businesses can’t afford to implement in their own IT environment.

Scalable . Leading SaaS applications are designed to grow with your business. No longer do you need to worry about obsolete hardware, databases, and software, and there’s no more investing in technology infrastructure and personnel as your business grows.

Configurable . SaaS providers have a team of professionals who are always working to enhance and update the core applications and products. This saves companies the time and money spent on updates and custom development. In other words, no more legacy versions of outdated software.

Deployable . The implementation cycle for SaaS solutions is shorter than the traditional on-premise approach to implementations. Access to the SaaS software requires only an Internet browser and connection—you no longer need to wait for infrastructure to be staged, databases to be configured, and software to be installed. You are logged in, using the SaaS software almost immediately. SaaS solutions also are easier to deploy in small phases as compared to their on-premise counterparts.

Manageable . SaaS providers manage the infrastructure, application, and data security. They also tune their products for performance. Data is protected via fault tolerance and off-site data storage—that is, if one system fails, there is another that picks up—often making it more secure than the data companies store with their current, in-house systems.

Today there are SaaS solutions available in a number of business application areas, including enterprise-class ERP/MES ( ), customer relationship management ( ), human resources ( ), financial management ( ), and sourcing and procurement ( )—to name a few.

In these challenging times, organizations can no longer ignore SaaS applications and the benefits they can generate. To put it simply, it’s a cost-effective way for companies to get the sophisticated business software they need to compete and grow without incurring the often high initial costs associated with purchasing and maintaining the applications and infrastructure.

“I can now put the energy into fine tuning and optimizing the business, Wrayco’s Knutty concludes. “Finally

About the author: Peter Pearce, senior manager with consulting group Virchow, Krause & Company LLP , leads the organization’s SaaS team, providing expertise in manufacturing, distribution, quality and finance, lean manufacturing, business process reengineering, program management, IT, and strategy.