THE ROI FROM SOFTWARE-AS-A- SERVICE (SAAS)

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1 THE ROI FROM SOFTWARE-AS-A- SERVICE (SAAS) How Cloud-based solutions can provide significant ROI. REPORT David Snelson / V3 / Nov 2011 Waer Systems Limited

2 AN OVERVIEW Software-as-a-Service, or SaaS, is a term frequently used but what does it mean for businesses and what are the financial implications resulting from utilising this software? This white paper aims to highlight the financial benefits of both short and long-term usage of SaaS and how it can benefit your business. WHAT IS SAAS? SaaS is software which is deployed over the internet and can be run behind a firewall on either a local area network (LAN) or personal computer. The software is licensed and a provider will offer an application to customers. This can be provided in two ways: Firstly, as a service on-demand where a subscription is paid using a pay-asyou-go format. Secondly, as a free of-charge service. This may be offered to users where the providers believe they can generate revenue from supplementary services such as user list sales or advertising. SHORT- AND LONG-TERM BENEFITS OF SAAS The early concept was that SaaS offered primarily short-term benefits. SaaS could: Fill temporary IT gaps whilst bigger projects were developed both internally and externally. Offer companies the opportunity to continue working without having to carry out large administrative tasks such as due diligence. For example, if new systems were to be introduced, then: checks needed to be carried out on existing hardware and what could be altered/introduced to improve efficiency; potential solutions needed to be analysed; the cost implications of introducing different systems needed to be assessed; and associated hardware and labour costs needed to be calculated. These could all be time consuming and costly. Significantly reduce IT costs and overheads for companies as there were no associated hardware costs, maintenance costs or employment costs. The main outlay was paying for the actual software and its usage. As the popularity of SaaS has increased, so too has understanding of the longerterm benefits associated with it and companies now view the SaaS model as a positive, longer-term investment. 2

3 SaaS short-term benefits now extend into longer-term ROI. For example: Quick adoption and faster route to market means companies can have minimal interruption to their working practices and gain early competitive advantage. SaaS systems also exhibit more convenient and flexible scalability and the providers often offer reduced licensing fees as the number of users increases. This in turn can have a knock-on effect with reduced training and support costs. Incremental increases in capacity are much smoother than the in-house option, also minimising funding requirements. Investing in SaaS offers easier administration and significantly reduced on-site costs; existing maintenance costs can be eliminated as no server installation is required and staff do not need to be on hand to provide help and server support. As a result, these staff members can be transferred to higher value and/or more proactive roles. Companies are increasingly aware of the impact they have on the environment and reducing their carbon footprint plays a major part in this. SaaS can help significantly reduce a company s carbon footprint in a number of ways. Firstly, companies who run their own servers often use ones capable of massive outputs (much larger than their actual need, often because they are forward planning for possible expansion in the future). However, this means servers consume huge quantities of power, even though it is unnecessary, as they are only required at the present time to provide a small service. SaaS offers companies the ability to do away with this. The SaaS provider will have a server which allows any unused power to be utilised elsewhere, as well as providing server space for a large number of users and not just a small percentage. A SaaS provider also reduces the carbon footprint by reducing the number of devices which draw power. For example, instead of having ten companies each with ten servers, there is one server which provides for all these users. There will, in turn, be reduced connections and one back-up device instead of ten etc. One study has suggested that CO 2 emissions can be reduced by up to 90 per cent for small companies (up to 100 users), way above 60 per cent for deployments of 1,000 users and in excess of 30 per cent for 10,000 users. i Naturally this will have significant cost benefits. 3

4 BENEFITS OF UTILISING A SERVICE PROVIDED OVER THE INTERNET Security is a concern that is regularly raised with the SaaS model. Naturally, providers give thorough consideration to its implications and the reality is that security is a strength of the model and extends to high availability (reduced risk of downtime), consistency and compatibility. The benefits of utilising a service provided over the internet include: Automatic updates and patch management which equals compatibility. As SaaS is provided over the internet, the SaaS provider will usually offer automatic updates and patch management. This contributes to another major benefit which is compatibility. As the software is updated centrally, all users and employees will be using the same version of the software. This cuts out any confusion which can arise when different departments have to update their systems in stages and it means there is full and easy collaboration. The greater the use, the greater the benefits. With the growth of the number of company users, a good provider will modify and improve the SaaS product for the benefit of all licensees. Once again, there is no requirement for a company to justify expenditure for internal change. Global access. With the internet as the access backbone, the network is no longer a limiting factor. Data become accessible on a global scale at an acceptable cost. Fixed costs. With a well-designed system, efficient implementation and correctly priced license fees, on-demand SaaS provides an effective service with known costs. Managers can budget more effectively as the fees are clearly understood and there are no unanticipated hardware costs. Less hassle. Not only is there reduced complexity as the responsibility for maintaining the software lies ultimately with the provider, but costs are kept to a minimum as devices are not installed with unnecessary applications (which can often happen, particularly in larger organisations). 4

5 WHY HAS SAAS PROVED SO POPULAR? The rationale for implementing SaaS is linked to a number of factors: Computers are universal and so wide-spread that most information workers have at least one computer. Invariably these have internet access and suit the requirements for SaaS. Network speeds are increasing constantly, at minimal cost, broadband is now much more widely available with business tariffs targeted at supporting these sorts of services. SaaS eliminates a considerable resource drain on IT departments, reducing both manpower requirements and associated overheads such as salaries and other employment costs. Hardware takes up both considerable floor space and energy consumption which SaaS eradicates. SaaS systems prove more reliable, quicker to market and more conveniently scalable than the in-house alternative. A SOLUTION THAT HAS PROVEN ROI RESULTS The providers of SaaS systems are confident that their solutions offer a demonstrable ROI. WAERlinx, from Waer Systems, is one such system that can fully justify that statement. WAERlinx is internet based so it s flexible, easy to use and available to your entire supply chain, 24 hours a day, anywhere in the world: Total flexibility: WAERlinx has a cutting edge container design, giving you the flexibility to adapt your supply chain with minimal disruption. You can focus on any part regardless of its location (e.g. in a kit, pallet, warehouse or even country). You can always view the detail and you always see the product. Lower total cost of ownership: As a SaaS solution, WAERlinx has a lower total cost of ownership than other solutions. There is no need to invest in expensive hardware and no need to install software. An end-to-end solution: WAERlinx combines a powerful warehouse management system with inventory optimisation. As stock is scanned in or out, the entire supply chain is updated and optimised with no manual intervention. Practical and Results Driven: WAERlinx is easy to use for non-technical employees even though it is a powerful and sophisticated system. It provides high-level management reports for a complete overview of your operation. 5

6 Analysis: WAERlinx provides analysis and advice but it also keeps your supply chain optimised and moving automatically. Overall: SaaS offers a good ROI because it provides a solution which significantly reduces overall supply chain maintenance costs. It can potentially change the way your business is run, reduce your costs, improve your product intelligence and is worth investigating further if you want to make significant savings. SUMMARY The rationale for implementing SaaS is clear. The ROI is extensive and the main factors of SaaS that contribute to this are: Ease of access Improved product intelligence Lower running costs and carbon footprint Security Quicker implementation Regular improvement, update and development Flexibility and scalability. The days of onpremise software are numbered as technology moves into the Cloud and all the advantages that this brings: quicker time to productivity, decreased costs and increased ROI. Sales Director, WAER MAIN BENEFITS Faster Time to Value A SaaS implementation is a complete, pre-built application. It is more cost-effective to scale to multiple locations or suppliers/customers than the on-premise equivalent. No Up-Front Capital Expenses The pay-as-you-go model minimises risk because an enterprise can roll in applications based on business need, e.g. VMI, Kitting, Track & Trace etc. Less Technical Resource Intensive With SaaS, those who work in the warehouse and at points in the supply chain can do more of the implementation. Simplified Integration SaaS makes integration with other applications such as SAP, faster, easier and less risky. 6

7 Waer Systems specialises in the design, development and implementation of flexible software solutions for organisations with complex supply chain and reporting needs. The company was established in 2000, initially to meet the need for improved supply chain execution and warehouse management within the global aerospace industry. Today, our innovative, elegant solutions deliver increased process efficiency, optimised parts/asset management and realtime information flow to market leaders in a range of sectors. Waer Systems Limited Eight The Quadrant Marlborough Road Lancing, West Sussex BN15 8UF UK Tel: +44 (0) Fax: +44 (0) infoeurope@waersystems.com Waer Systems France Bureau de Toulouse - SBAC 5 Avenue Albert Durand Aéroport Bâtiment Blagnac, Toulouse France Tel: infoeurope@waersystems.com i Environmental considerations for Cloud Computing 11 February 2011 by Graham Chapple. 7