How the SaaS (Software-as-a-Service) model impacts business process improvement

An early question about business process improvement (BPI) and the use of technology was:

Does the technology drive the processes?


Does the process drive the technology?

While many believe that the process should drive the technology because you just want to spend your limited technology budget on the most efficient process possible, the information technology (IT) environment is happening with the increasing use of the software-as-a-service model.

The SaaS model is the next generation of software implementation models. Over the past decade, organizations have moved away from the traditional software model (where the company provided the infrastructure to host the application, customized the solution to the specific needs of the business, provided the necessary IT support, and made major upgrades every three to five years) removed. to the Application Service Provider or ASP model (where the provider hosts a software application on its hardware and leases a unique instance to a company that allows for some level of customization).

The ASP model did not require companies to purchase on-premises hardware and offered the opportunity for cheaper and faster software implementation. By moving to the ASP model, companies hoped to reduce the total cost of ownership for a technology implementation.

Today, the SaaS model is growing rapidly and is rapidly defining the way companies implement software applications. You can think of SaaS as a next-generation ASP, with the key difference being that all clients are on the same instance. In this model, the provider is responsible for capacity increases and scalability. They continuously conduct research and development, allowing them to provide customers with more frequent improvements without the need for major upgrades. SaaS revenue grew 21% from 2010 to 2011 and is estimated to more than double by 2015.

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While companies are happy to reduce their technology investments, they don’t necessarily want to use the exact same product their neighbor is using. However, the SaaS model depends on application standardization to keep costs down, which means limited or no customization. So how do companies balance the financial benefits of the SaaS model with the need for unique business processes, since one of the things that differentiates companies from the competition is their business processes?

A company needs to recognize what really sets it apart from the competition. What are the core competencies of your company? Accept that not all business processes are created equal and focus your resources on building (or improving) business processes around your differentiators. For example:

  • if Research and Development differentiate your business, focus on processes like idea generation, market research and product development.
  • if performance sets you apart, focus on processes like order processing, order fulfillment and customer care.
  • if retain employees is critical, focus on people-centric processes like recognition and succession planning.

Take advantage of the lower costs that the SaaS model offers for non-core business processes, but continue to improve the business processes that differentiate you from your competition.

Copyright 2012 Susan Page