OpenAir CEO Discusses SaaS Business Model in Smartbiz.com Article

Beyond SaaS: Using On-Demand Apps
to Optimize Business Processes

By Morris Panner, CEO of OpenAir, Inc.

One of the misconceptions about software-as-a-service (SaaS) is that it's all about software. Granted, on-demand online applications are the foundation of SaaS, but not all software is delivered equally.

A new generation of SaaS vendors has emerged, and its mission is much more ambitious than simply delivering software over the Internet. Instead, next-generation SaaS vendors seek to leverage their large customer base to create virtual global enterprises, making the efficiencies of scale available to their entire customer base.

The goal is to create an application ecosphere, one that links business applications with business processes. These business-automation SaaS providers offer more than software: They give startup, small and other businesses a set of automated processes that fundamentally change how common business problems are tackled.

Remember, technology doesn't solve business problems. Technology is a tool. In the small and medium-size business world, technology too often becomes the underlying problem. It's unwieldy, time-consuming and distracting. Rather than focusing on core business objectives, many SMBs find they've become slaves to technology. Of course, this happens in large enterprises too, but they have large IT staffs. SMBs don't.

Most businesses turn to SaaS for one of two reasons. Either budgets are tight and they can't afford to purchase the software outright or they don't have the IT infrastructure in place to support it. Those are perfectly legitimate reasons. However, even more compelling reasons to choose the SaaS model often are overlooked or misunderstood.

First, the business-focused SaaS model changes the nature of IT, shifting the focus from the application to the end user. Rather than having data locked into application silos, SaaS vendors utilize open-source software and common application programming interfaces (APIs) to make data easily accessible across the organization. What is the best way to access data? Which application best serves your needs? How can a particular application help you do other parts of your job?

When SaaS providers free this data, they also shield end users from complicated application interfaces. Instead, users access information through a convenient interface that allows them to accomplish multiple goals without having to shift applications and learn a variety of programs.

Extended further, this changes the nature of IT, transforming it from an information technology support department to a business-optimization unit. Instead of working with users to fix problems, IT (or in this case SaaS customer service) works with end users to optimize their workflows. That's a lot more than just software coming in over the Internet.

Once SaaS is viewed holistically, disparate applications can be synchronized and centrally managed because business-automation SaaS platforms look at data as data, not as something trapped in an application. Thus, data is managed via a common platform and available to whomever needs it from whatever application best suits their needs.

Since many problems are common to just about any business – think payroll, HR, or CRM – they can be optimized across a customer base via the SaaS provider. Sure, your business will have its own unique needs, but 90 percent of the problem has been tackled before. If all you're left with is that 10 percent that's unique to you, the problem is practically solved. The net effect is that SaaS helps a small or mid-sized organization receive the efficiencies of scale common to a large enterprise.

Business-focused SaaS allows SMBs to function as virtual enterprises. Think of it as the Wikipedia for business processes. Wikipedia relies on the expertise of a vast user-base to provide an online encyclopedia that is broad, exhaustive and accurate. Critics have questioned the accuracy of Wikipedia, but a study in Nature late last year found it every bit as accurate as traditional encyclopedias.

Business-focused SaaS vendors rely on a similar equation. SaaS providers reel in knowledge from their vast customer base, automate common business processes, and, in turn, make each small customer savvy and experienced by default. Common business problems are automated and streamlined–and available on demand.

Another misconception about SaaS is that it's not secure. The truth is SaaS is far more secure than your typical enterprise network. It's a trust issue. People trust those within their organization but are leery of outsourcing key information. However, think of it this way: is it safer to store your money under your mattress or in a bank?

Most of us will choose a bank, not just because it's harder to break into, but it also has additional layers of protection such as FDIC insurance. Similarly, information stored in a SaaS provider's data center has layered security around it, continuous backups, and automated disaster recovery. These benefits extend to other areas of concern, such as regulatory compliance and supporting remote users, as well. Since compliance is a problem common across the SaaS customer base, compliance and auditing become inherent to your application infrastructure, rather than add-ons that are cumbersome, chaotic, and difficult to understand. Similarly, remote support is secure and stable, removing the burden of managing VPN software or worrying about weak authentication schemes.

The bottom line is that SaaS is a platform tightly linked to your bottom line. Business-focused SaaS provides executives with precise, quantifiable, real-time insights into critical business metrics. All key data is centralized in one easily accessed system, so managers have instant answers to difficult business questions, such as historical and projected utilization rates, how profitable different projects and clients are, and whether or not the organization is on track to meet timelines and budgets.

In a SaaS ecosystem, it's all just information, after all, but the trick is extracting that information in a meaningful way. As with security, compliance, and support, that's built into the platform. It's no longer a far-off business goal, but a common, automated business process.

About OpenAir
OpenAir is the Web-native professional services automation solution that helps independent software vendors, marketing services companies, consulting firms, and internal corporate service organizations increase top-line growth, improve operations and enhance financial controls. OpenAir customers increase profits by capturing additional billable hours, increasing employee utilization, streamlining project management, accelerating revenue, enhancing collaboration, improving revenue recognition and project accounting, and sharing knowledge and best practices throughout the organization. OpenAir has helped leading services organizations across six continents increase profits through the subscription-based OpenAir Complete solution. For additional information, visit www.openair.com .