Software as a service

When purchasing a computer for the office, most people typically look for the right software to utilize on their new system. Let’s face it, what would the hardware be without the right software to handle accounting, human resources/payroll, and contact management? Probably nothing more than a boat anchor or high-priced door stopper.

But what do you do when the simple software installed isn’t as robust as you need it to be?

While in most cases you can run your business effectively with the software bundled on your new desktop, there are certain instances where you may benefit from an ASP or SaaS.

ASP, or application service provider, is a service company that provides access to a software application over the Internet. The service provided could be a CRM (Customer Relationship Management) application, payroll/HR service, or lead generation system, to name a few.

SaaS, or software as a service, refers to the delivery model of ASP applications where the application is provided through the network (Internet) and the administration of the systems are centralized.

SaaS is one of the newer ‘buzz words’ around the Internet that is redefining the ASP concept as software specialized for delivery over the web.

You may be using several different providers right now and not realize it. Ebay payment transaction companies such as Paypal are categorized as ASP’s. Others may be services from Hotmail, Yahoo, and IBM.

One of the larger CRM providers, Salesforce.com, is a SaaS provider for CRM systems. Users can utilize a complete customer management system from anywhere there is an Internet connection.

There are also industry-specific applications that handle time tracking and job costing for construction and other industries.

So why would you use one of these ASP companies rather than installing the software yourself?

1) Simple infrastructure requirements. To utilize an ASP all you need is an Internet/network connection. Most hardware requirements are very minimal and that saves a lot of money over typical requirements for a server, network, etc. on most software systems.

2) Lower TCO (total cost of ownership). You can easily predict your monthly business software costs based on a standard rate per user. The costs are spread out during the use of the system rather than a large payment up front for initial installation, new servers, and network infrastructure.

3) Reliability and security. With a centralized security model and infrastructure stored in a better environment than your typical small office, businesses can increase uptime and not have to worry about technical tasks such as data backups and disaster recovery.

Some of the inherent disadvantages of ASP’s are being addressed by the larger companies. Lack of customization and integration with current business systems makes it harder for the more specialized small offices to adopt SaaS.

However, with tightening budgets and the ever increasing need for more productivity with fewer resources, some businesses will gain value using software as a service.