Why buy software, when you can rent it?
Puneet Mehrotra
Hindustan Times
You have probably done it without giving it a name.
Every time you get on to the Internet and use a
Web-based email service like Hotmail or Gmail, you are
actually borrowing some software that is placed on
the network computers, or servers, that companies like
Microsoft or Google own. The same goes for
chat applications or photo-sharing.
Now, imagine a scenario when a company does the same
to run its businesses like human resource management
or accounting. Or a situation where an individual
makes presentations or spreadsheets without using
software installed in a personal computer.
That is increasingly getting smarter, easier and even
cheaper. A bit like renting a serviced apartment.
Gone are the days when in order to run software you
needed to own the software and have huge setup
infrastructural costs for the same. We have now
entered
an era where you pay nothing to own software but pay
simply for using it. There are no huge setup costs.
The model for delivering this service is commonly
known as Software as a Service (SaaS) and as the
industry as a whole is now taking the SaaS route. The
philosophy of SaaS is a low-cost way for businesses
to obtain the same benefits of commercially licensed
software without the associated complexity and high
initial costs.
The working of SaaS is simple. There is no hardware,
no server, no professional costs even. All that is
required is just a simple subscription. The software
provider is responsible for its availability,
maintenance, scalability, disaster recovery and other
support operations. SaaS has its roots in the ASP
model
(application service provider) that was hot about
seven or eight years ago in terms running a turnkey
application on behalf of their clients. As a concept,
it was only in March 2005 that SaaS got recognition.
In less than two years the whos who of the industry
is moving the SaaS way.
Microsofts Indian unit announced in August the launch
of its ERP (enterprise resource planning) solution
going the SaaS way. Currently the solution is
available for three users at Rs.25,000 a month, five
users at Rs.35,000 a month and 10 users for Rs.60,000
a month. There is no separate hardware, no
software and no human resource cost required besides
this. Compare this with the traditional model where a
company had to pay Rs. 10 to 15 lakhs upfront
to buy software to run activities like payrolls,
accounting and inventories besides spending on
hiring and training software staff to support it all.
Oracle, which makes business software, has one of the
broadest portfolios of services, covering 360
solutions, 2,200 organizations and around 1.7 million
users globally. Oracle claims a saving between 30 to
80 per cent in ownership costs for customers as a
result.
Citrix has applications such as GoToAssist for
technical support, GoToMeeting for web conferencing
solutions, GoToMyPC remote access to a personalised
virtual desktop that functions like a home PC, in
addition to GoToWebinar for online events. German ERP
software giant SAPs SaaS solution Business
By Design is set to launch in India in 2008.
"SaaS as a concept and for investment is fast emerging
in India. Indian enterprises, whether small, medium or
large have started to notice and are considering
SaaS solutions, as they realise the need to focus more
on their companys strategic initiatives, core
competencies and growth, says Sanjay Mathur of Oracle
India, who says SaaS, billed on a per user/per month
basis, can help customers manage IT expenses much
better and not worry about spending on upgrades.
Microsofts Rajeev Mittal says it is right for small
and medium businesses (SMBs)
We are confident that the SMB segment in India will
benefit from the accessibility to ERP solutions that
this model offers, and that it will in turn accelerate
the already healthy pace of IT adoption in the SMB
community, he says.
SaaS model offers an opportunity for Indian IT firms
to enter the software product space in which they have
not been able to make a mark.
Customer relations management (CRM) software firm
Infogain sees the SaaS platform as a huge opportunity
for India. With overall growth of Indian economy
we can see the rising awareness and adoption of SaaS
across the region, says Eddie Chandhok, President,
Global Delivery, Infogain Corporation.
(The author is an independent writer on business and
technology issues)
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