Considering today’s corporate landscape which has emerged after the recent global recession, no company wants to entertain overheads of any sort. The experience of this recession has instilled uncertainty among many and corporates are committed to lean structures like never before.
Most of the principles of lean manufacturing, which were once propagated by the Japanese, hold true for the IT also. IT has advanced very much over the decades and has become more of a commoditised necessity for running the processes for many businesses – big and small alike.
With the same fundamentals of assembly-line production (output) IT can also be induced with just-in-time utilization of the services in the cloud starting with hosted services for software application – the SaaS. Just like in manufacturing the SaaS concept can help organizations to go lean because of the following reasons:
- SaaS will support organizations in elimination of waste by not owning the software. By going the SaaS way, organizations can avoid owning the entire software if they are not going to use many of its features. SaaS will allow them to go for pay-per-usage options which are usually only for those functional features or the bandwidth which are needed and are used by the organizations.
- Organizations will be able to reduce software inventory by utilizing hosted application services through SaaS only when they are required. They need not keep inventories of the software applications anticipating that they will need them in near future.
- SaaS will assist in improving productivity, as SaaS frees resources which can be utilized for concentrating on business development. SaaS also helps in removing redundancy by cutting down significantly on upgrades and other integration and maintenance issues and hence saving on cost and opportunity costs.
- Just-in-time usage is feasible with SaaS as it allows organizations to scale almost instantly whenever they need to expand their usage. Instead of working based on forecasting, dealing with the uncertainties in the business world and locking in the resources, SaaS enables almost instant scalability for the organizations giving them access to resources just-in-time.
- The high bandwidth network accesses enable organizations now to look more into collaborative arrangements for their human capital distributed across geographies. The collaborative tools available in SaaS model can support distributed set-up of work environments for many organizations, making them nimble and reducing greatly on their costs of owning sprawling real estate spaces.
With all the above advantages it is clear that SaaS induces lean structure in the organization. SaaS is the necessary thing in the future – the future which requires single most important competitive trait of all the organizations and that is being agile. Agility helps organizations to adapt to changes coming in various forms more quickly. In short, they can become more adaptable to new technologies and trends faster and can implement these swiftly with SaaS and other cloud services.
Good analysis of some other areas of cost savings through SaaS. However, just as businesses do not want to add overhead, IT executives do not necessarily embrace the lack of headcount that is seen as critical to reducing the associated overhead. Nor should SaaS marketers rely too heavily on cost savings alone for competitive positioning. I and other blogged on that issue here: http://www.enterprisecioforum.com/en/blogs/jimgardner/saas-cloud-and-jobs
Hi Jim
Totally agree with you cost is not the only factor to move on the cloud/SaaS. There are many inherent benefits which come along with SaaS model as you have listed in your article which play more important role and compelling enough to move to SaaS model. One of them is the opportunity cost you miss by loosing time on non core areas.
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[...] Second area here you can cut costs drastically is the IT. Instead of going the traditional way and owning the IT infrastructure (hardware and software) go for cloud computing solutions. Cloud computing is really beneficial for SMEs and start-ups and will help your organization go lean. With cloud computing you save on upfront costs of setting up and owning the entire IT department and you pay marginally only on the services that you use. Read more on how cloud computing is a strategy to cut costs for your organization here and here. [...]
[...] to the cloud. This trend is true both for the enterprise organizations and start-ups/SMEs. The advantages of SaaS are well-known and truly appreciated. As a result, SaaS applications form an important component of [...]