Data on Demand

Ramiro Perez doesn’t like to wait around. As purchasing manager for Copart Inc., a $500 million automotive services firm based in Fairfield, Calif. helping insurance companies process and sell “total loss” vehicles, his job is all about efficiency — and that’s as much about making sure his organization doesn’t waste time as it is about controlling costs. That’s why last year Perez convinced his IT director to sign up with ExpenseWatch, a hosted Web-based application for managing operating expenses.

“We run 120 sites throughout the United States and Canada,” says Perez, “and the people in our organization who have the authority to sign purchase orders and invoices are always traveling. With ExpenseWatch, our executives can access expense reports, contracts, invoices and quotes as they need them from anywhere in the world. It’s extraordinarily efficient.”

Welcome to the era of on-demand software. Also known as software as a service (SaaS), these applications are enticing enterprises to move critical data from internally based systems to multi-tenant, hosted solutions.

Access Anywhere at Any Time

SaaS offers companies new solutions to the perennial problems of cost, risk and, most of all, access.

Although corporations have long provided employees with remote access to applications and data inside the firewall, on-demand applications make remote access the norm rather than an additional access route. For the most part, there’s no client component allowing new users to sign up swiftly and easily. Employees can use any Internet PC equipped with a browser to gain access to critical data.

“There’s no longer any need to go through the hassle of setting up employees to work through a virtual private network (VPN) to gain remote access, since all of the remote data resides online,” says Eric Berridge, co-founder and principal of the Bluewolf Group, an IT consulting firm in New York, N.Y., specializing in helping enterprises move to on-demand applications. Bluewolf derives most of its revenues from implementations of Salesforce, an on-demand customer relationship management (CRM) application, and Open Air, a hosted, professional services automation (PSA) solution.

Instead of paying hundreds of thousands or even millions of dollars upfront to install on-premise software, companies pay hosted applications monthly subscription fees. Furthermore, these fees can be deducted as operating expenses rather than amortized as capital expenditures.

Hosted applications also result in reduced risk. Most on-premises application installations fail during an implementation process typically so bug-ridden that it can take years to complete. The time an on-demand service requires to get required functionality customized and ready to use is just weeks — or even days. And if on demand solutions don’t work, the customer can simply walk away — no strings attached.

Earlier versions of SaaS often foundered on the issue of security. Companies were uncomfortable with the notion that their information crown jewels were residing on someone else’s servers. But as more time passes without data breaches at on-demand vendors, companies are becoming infinitely more reassured about the safety of their data. “Security is a non-issue as far as we’re concerned,” says Perez.

SaaS-y Promises Hosted applications provide further advantages which, while less obvious, save time and boost an organization’s bottom line. These include:

More reliable off-site backup Many companies are beginning to see that SaaS’ built-in off-site data storage makes it a perfect solution for their data recovery and business continuity needs, says Jeffrey Kaplan, managing director of THINKStrategies, a consulting firm based in Wellesley, Mass. “It’s one of those unintended benefits that has increased in importance as people become more aware of what SaaS can do,” he says.

Compliance with regulatory mandates Most companies are facing increased regulatory mandates, either because of universal laws such as Sarbanes-Oxley (SOX) or industry-specific regulations like the Health Insurance Portability and Accountability Act (HIPAA). Most on demand solutions offer automatic compliance with these regulations, says Kaplan.

Cheaper archiving After instant and always available data access, the main reason Copart chose ExpenseWatch was because the archiving of critical information could be achieved less expensively than with an on-premises solution. “Document retention was huge for us,” says Perez. “Otherwise, we would have had to invest in servers, bring them in-house and hire personnel to maintain them.”

Easy transition to globalization Because on demand applications are so easily scalable, as well as being instantly available in other languages, many international companies are turning to them as well. “An on-premises solution generally requires installing a whole new version of the software. It’s much easier to switch between languages and currencies (with a hosted application),” says Berridge. “All it takes is a click of a mouse.”

The bottom line: Any company looking to cut implementation costs, reduce network-operating risk and provide near-universal data access should further investigate whether SaaS’ promises pay off.