At your service

Software as a service could be just what companies need to minimise cash flow.

When Microsoft’s Hotmail was first launched in 1996 the concept of logging into an email account stored on a remote server felt awkward to most of us. “Where are my messages stored?” many of us asked ourselves. “Can someone else read my mail? How can this possibly be free?” Yet the lure of a mailbox accessible anywhere with an Internet connection at no cost was too good to resist. Hotmail quickly took over the world.

Today, a similar idea, known as software as a service (SaaS) is posed to take over in much the same way. Companies such as SAP are now providing popular programmes on-line to clients on a subscription basis, an alternative to selling users licenses to install the software themselves. “You can          Kamel El-Ghossaini
pay a monthly subscription and run the application through the web,” explains Kamel El-Ghossaini, Senior Manager, Supply Chain Solutions for Span Group. “This minimises your hardware costs and minimises your initial investment. But, at the same time, your data will be stored on a third party server.”

Span Group recently began selling integration software Boomi Atomsphere
in SaaS format. Clients can use the programme to connect different software services together. “Integration serves two purposes,” says El-Ghossaini. “The first is application integration, which means connecting your internal systems, for example your warehouse management system with your financial application. The second is business-to-business integration, where you have to integrate with your trading partners.”

“The new version of Boomi is 100 per cent SaaS-enabled,” he says. “This means that instead of customers buying
the integration platform, installing it locally, developing it and then executing
it; all development and set-up will happen over the web. Only the deployment part, the execution, will happen locally.”

SaaS is an ideal solution for cash-strapped times, according to El-Ghossaini.
“With this economic situation, companies would like to minimise their investment and reduce their cash flow,” he explains. “Instead of having to buy the software and pay the cost one time, today they are able to pay a monthly subscription for as little as US$15 a month and still receive the whole benefit of the solution.”

Only 15 dollars per month? I’m suddenly a bit sceptical. “It could cost US$15, it could cost US$100, it could cost US$200,” he says. “There are multiple factors which determine the price. One is the number of interfaces a client has, or what we call ‘trading partners’. Another factor is the different adaptors that you use. If you are moving data from file to database or database to file, this will be very cheap. But if you are going to read EDI messages or XML, for example, you might need to add some components.”

Either way, a company will spend a great deal more to purchase the software
license. “Purchasing the software upfront will cost not less than US$15,000 and you still need the proper hardware in place,” he says.

SaaS is also ideal for a company in need of a software programme only temporarily. “Tomorrow, if one customer decides that he no longer wants to continue with the system, he can still run the application but he cannot change or modify anything he has done.”

El-Ghossaini says one of the major obstacles to widespread SaaS implementation
is a client’s fear of storing data on a remote server – an attitude that can be changed. “It’s like using an ATM machine,” he explains. “A lot of people withdraw money but very few people deposit money. It’s a cultural thing.”

This, however, is not such a concern with integration software. “With an integration platform like Boomi, the risk is very minimal, because you are not sharing any data. Your data is still sitting on your end.”

He can see, however, why clients would avoid going the SaaS way for more sensitive programmes such as an ERP. “They would worry because all their financial data is being stored abroad,” he says.

While Span has over 100 customers for the traditional version of Boomi, at the time of our interview not one had officially signed up for the SaaS version.
El-Ghossaini, however, seemed confident the concept would pick up. “I am very positive that SaaS will be more widely adapted. I want to stress that today’s economy will help this technology penetrate the market, both regionally and abroad.”