But opinion is divided across the industry regarding its future. Steve Keifer, VP industry & products, GXS, thinks that, like with any new concept, growth rates will seem slower in comparison to the initial explosion, but that it is here to stay.
However, he believes that SaaS will never displace the traditional software model, rather that there will be more hybrid models in the future. It is generally seen as a model that can help support collaboration, creating more of a “network effect” in the supply chain. Keifer says one of the benefits of SaaS, is that it frees up the ability to split payment across different trading partners – which isn’t possible if the system is run in-house.
However, Mark Croxton, managing director, Aldata, is cynical regarding the SaaS phenomenon, adding that the market has been swept up by too much hype. “The concept works where it’s applicable – for example, it can work well on smaller areas such as transport management, customer loyalty, human resources, but when it comes to the core SCE areas such as inventory management and replenishment, there is very little take-up. We’re a long, long way from seeing any kind of core take-up – and I don’t see that changing,” he says.
Alex Mills of Chess reckons most customers still prefer to own and operate their own applications. “A lot of the things that work well on SaaS are low level stuff that costs coppers – for example, Tacho analysis at £1 per week per truck,” he says.
Chris Jones, executive VP, solutions & services, Decartes says “the jury is still out” on whether SaaS will prove more costly in the long term. Warehouse management has been ruled out by most vendors as an area in which SaaS is tricky to apply, being too transaction-heavy and reliant on quick response rates.
Jones says that the fact that SaaS models are reliant on the response time of the internet, can work against it. “If a customer is getting a slow response, you have to work out what’s responsible – the hardware or the software. In these types of cases, bringing it in-house can help drop system complexity.”
Mills adds: “Aside from reliability of connection (which proponents would say is not an issue) there is the paranoia that a system on which your business depends heavily is not under your full control. This paranoia can be worse among 3PLs who are even less willing to risk their livelihood by taking chances with someone else’s stock.”
Recent research by Sterling Commerce highlighted the fact that 72 per cent of European companies plan to use cloud-based B2B integration services to reduce costs next year. The research took in the opinions of some 300 senior IT managers across the UK, France and Germany.
Sterling’s Ronald Teijken says: “This confirms that companies are now ready to take advantage of the flexibility and scalability of SaaS B2B integration solutions and embrace the pay-for-use model that SaaS represents.
Companies are still concerned about rapid ROI and reducing risk and SaaS offers companies access to the most up-to-date business software, without having to make expensive upfront investment.
“Already in the first months of 2010 we have noticed an increasing demand from manufacturing companies for SaaS or on-demand systems,” he adds. Sterling Commerce is planning to make all its solutions available in on-demand models.
And AEB’s Mark Brannan reckons SaaS solutions will eventually dominate the IT world.
“With better economic conditions the demand for SaaS may slow somewhat, but ultimately the attraction of these solutions in reducing total cost of ownership, and speeding up ROI will ensure that they remain a popular choice.” 2009 was the year for sweating assets, with customers looking for add-ons to existing systems. This is likely to be the case for much of 2010.
