SaaS: IT in the cloud – green light for innovation

The digital revolution is causing commercial innovations to hit the market and reach customers with greater speed and efficiency. Going through the cloud is the ideal route since business is changing at a faster and faster pace. SaaS is the key technology for digital solutions that can always keep up. 

In light of rapidly accelerating technological and market development, intelligent outsourcing to move business-related applications into the cloud is the only way to synchronise a firm’s digital processes without economically untenable outlay. Company size is not an excuse. Today, the cloud has every tool necessary for any need, all fully scalable and realistically affordable.

Although cloud applications and on-premises architecture will have to coexist peacefully for quite some time (and share data in the process), this has now become much more flexible than it was even a few years ago. But the news has yet to spread: 49% of companies are unable to shift loads from their own systems into the cloud, or have no idea whether they can. The question is what – ostensibly! – so often continues to stand in their way.

Reduce costs, operate more quickly on the market

The main advantages of cloud solutions for software are obvious:

  • The software is maintained by the vendor. This allows the company to concentrate on their core business rather than dealing with maintenance work, updates, data backups, etc.
  • Costs for SaaS are incurred based on use, and are always transparent; the company remains flexible in terms of both hardware and software, and gains agility. Investment risks are minimised.
  • Custom configurations and enhancements to software are automatically “carried over” during updates.
  • Cloud software is constantly influenced by diverse user experiences from across the vendor’s customer spectrum, ensuring an optimised needs-based focus.

Studies by McKinsey & Company and the Yankee Group have shown that investment costs compared to in-house software solutions can fall by 30% when an SaaS solution is chosen instead. Disadvantages to on-premises solutions are sometimes wheeled out, but whether these actually carry weight is highly dependent on the individual case. And, often enough, on location, too: where large streams of data would need to pass through slow internet connections, those connections would require upgrading would be required – but surely this would be a useful investment in any case from a commercial point of view.

The high degree of specialisation in software which is tailored exclusively to the individual needs of a company, in contrast to SaaS, must also be evaluated as a whole. On first glance, extensive customisation may currently be a compelling argument. However, it is important to consider that this usually requires correspondingly costly customisation in the future, too.

On the whole, it is precisely these issues that will be the focus of detailed consultation by professional cloud providers. And at least the further development of SaaS solutions, which receives continued heavy investment, is influenced by both the needs of potential customers and their feedback from ongoing cloud use.

Doubts over the competitive advantage from the cloud?

It was not long before the spread of cloud solutions caused a rather banal misunderstanding to gain currency: “what good are cloud applications to me if the competition are already using them, too – won’t I lose my market lead again straight away?” – Yes, but remember! The same was true of computing, and the steam engine, and everything else back to the invention of the wheel. Foregoing a new technology is clearly not the answer. As a Harvard Business Review interviewee pointed out, “being in the cloud no longer makes a difference – it would simply be a major disadvantage not to be there.”

Migration problems are another focal point for doubts over “moving to the cloud”. Many companies already delay internal updates and modifications to their software for far too long – for instance due to worries about process interruptions, teething problems, production outages, and so forth. In that case, the perceived chaos of transferring all their IT to an external system “the cloud” seems all the more alarming. What is overlooked here is that a haphazard procedure of this kind would be far from state of the art. Cloud specialists often recommend gradual solutions: migrating either a single branch to the cloud (as a sort of pilot), for example, or a section of data that already works largely in isolation.

Outcome is critical to market position

In short, taking the step from on-premises solutions to the cloud means that innovations which are dependent on digital processes can take companies just months to implement instead of several years. Software adaptations and improvements are highly user-focused and carried out with great precision thanks to in-depth functional analysis using a very large data pool – after all, Oracle now has more than 4000 SaaS customers. And a series of configuration and enhancement options give these customers extensive opportunities for adaptation, even though they use the same SaaS version as many other companies. Or, in the words of Steve Miranda, who is responsible for application development at Oracle: moving to the cloud is now only a matter of when. The biggest driving force for making the switch is that the cloud delivers more relevant innovations – and does so more quickly.