WHEN SaaS IS GOOD -
WHY EXECUTIVES ARE GRAVITATING TOWARDS SOFTWARE AS A SERVICE (SaaS)

By Timothy Wright, PMP

As companies look for areas to reduce operating costs, IT departments are being forced to manage with fewer resources. Because of this, CIOs are relying on SaaS. SaaS is defined as software that is managed remotely by a service provider on a “pay as you go” or subscription model. The SaaS solution provides support, hardware and security allowing companies to use their existing Internet access infrastructure. Many companies have or are considering implementing this model into their daily operations. This claim is most recently supported by the National Retail Federation (NRF) Retail Horizons 2010 survey revealing that 74% of senior executives from North American retail and wholesale companies currently use or plan on implementing a SaaS solution within the next year. (1)

Additional research supporting the increase demand for SaaS was published by Gartner. The study analyzed mid-market businesses interested in SaaS solutions over an 18 month period. In 2008, Gartner found 34% of midsize businesses had implemented or considered implementing SaaS solutions. In 2009, the Gartner study increased to 55% of mid-market companies. The continual increase in survey responses is clear, as a result of the impact on IT spending caused by the economy, companies are considering the switch to SaaS. (2)

Why is SaaS so advantageous for companies?

1. Lower Up-Front Capital and Cost Containment

Companies can save money on formerly expensive in-house servers by outsourcing to SaaS. By transitioning this to an outside provider, the up-front cost for hardware and security along with the total cost of ownership is reduced. However, before selecting any system, it is important that the company understands the time and resources needed to maintain the selected solution. By weighing operating costs of an in-house system against a SaaS solution, the company will realize how SaaS can support their efforts in cost containment and control. Companies can have control over IT costs and budgets can easily be managed.

2. Implementation Speed to Value

Standard methodologies are vital for any successful system implementation. But with SaaS, the speed to value occurs rapidly if the planning phase is executed properly. Paul Sandusky, Senior VP of Operations at Dayforce knows firsthand that, “SaaS deployment can be completed in a fraction of the time of traditional, on-premise implementations. SaaS providers invest in the technology, hardware and upgrades so organizations don’t have to.” (3) Therefore, companies can begin reaping the benefits of their software solution as quickly as possible. By understanding the distinguished user requirements (DURs), SaaS solutions can be deployed with few pitfalls in technology failures. Since the project implementation has proven to be shorter than the traditional in-house system deployment, the project scope is typically met on time and within budget.

3. Flexible and Scalable Architecture

SaaS is a flexible system that permits companies to control functionalities with ease using administrator controls. Even though the software is not in-house, the outside service providers allow for configuration modifications with minimal constraints. In addition to flexibility, SaaS is scalable to support thousands of users. In the case study below, a grocery store chain manages 3,500 employees using the Dayforce SaaS solution and this number continues to grow as the company expands.

SaaS CASE STUDY

Challenge

A high-end grocery store chain that employs over 3,500 employees needed a workforce management solution to help reduce labor costs while improving customer service enterprise-wide. In addition, the company was also looking for ways to reduce IT costs and complexity.(4)

Results

The grocery store chain partnered with Dayforce, a SaaS solution provider, to support the company’s cost reduction efforts. The customer brought day-to-day operations in line with its strategic objectives, achieving both the labor and IT cost reductions and the customer service improvements it required. These benefits were gained even as the company realized a lower total cost of ownership compared to its previous in-house legacy technology.

Moving all human resources and workforce management processes to Dayforce reduced licensing costs as well as ongoing integration and administration costs. With competitive pricing and scalability of the solution including the ability to deploy on a SaaS basis enabled Dayforce to pass on significant savings to the grocery store.

The Dayforce case study is a great example of how SaaS is executed in a company focused on cost reduction and limited IT resources. With more companies realizing the true benefits of SaaS through cost containment, implementation speed to value and system architecture it is clearly an option to consider when issuing a request for proposal. For more information on Dayforce or other SaaS solution providers please contact Clear Thinking Group.

About DayForce

Dayforce is an enterprise SaaS solution provider that enables organizations to integrate performance objectives into the planning, scheduling, and management of their employees resulting in optimal organizational performance and profitability.

Timothy Wright is a Project Management Professional and Senior Manager for Clear Thinking Group.

1 (Source: 2010 National Retail Federation Retail Horizons - NRF)
2 (Source: January 2010 Findings: Interest in SaaS Grows Among North American Mid-market Businesses - Gartner)
3 (Source: All Gain - No Pain SaaS offers a compelling way to adopt enterprise software - Dayforce)
4 (Source: Grocery Chain Achieves Goal: The Right People, at the Right Place, at the Right Time - Dayforce)