Software as a Service - like having a chauffeur?
What I hear from more and more Clients in the Small and Medium Business space, and even from prospective Clients, is that they would like to just know what their cost of technology is going to be for the year. Then they can budget for it (whatever it is that they agree to - which is not saying that it is as much as what some firms would like to charge them) and then get back to running and growing their own business. After all they have Customers to look after themselves.
Now maybe the best that these Clients have ever had it in the past, is that they would have a fixed monthly support contract for a year or more. This would involve the support firm actually doing work on a weekly or monthly basis in the form of troubleshooting systems that were deteriorating in some way (running out of disk space, or losing available memory through a server application's memory leak, or a failing backup attempt) and ensure that the Client's network and systems stayed running. Note, that this is not a "retainer". This works well and ensures that the Client has taken some responsibility for the effort it takes to keep a modern network of average complexity up and running and stable over a lengthy perdiod of time. They also get to spend their money in a preventative fashion rather than reactively when they are going under for the third time ...when it always costs much more (ever had to call a plumber out at 3:00am for a burst pipe?).
But, when a piece of hardware actually fails (beyond the control of the support company) then it would cost the Client extra to have the support company come out, diagnose it and then ensure that either they, or a break-fix company, took care of it.
Then there were the recommendations for additional purchases (hardware and software to solve tricky little problems that either came up as part of the business or else when somethign else got to the end of its useful lifespan). Not as regular as clockwork, but if a Client hadn't had one for a while then they learned to start looking for your caller ID or the account managers car in the parking lot... This could often be softened if the support company spent the time with the Client's decision makers to help them analyse their spending patterns and then assisted them is setting an IT budget for the years to come.
Increasingly I am seeing and hearing the decision makers of companies (150-200 users and all the way down to 5 users) take a look at their options for paying for their Software as a Service (SaaS). This entails them running all of their applications, including their desktop productivity applications on the servers in a hosting company's datacenter.
The financial benefits are multiple. If the Client moves to all thin clients then they can pay a single fixed fee per user (according to the software that they are renting) and then a small custom application fee per user for the resources used by the Line of Business applications that they are already own (and want to maximize their ROI from) and that they have moved onto the servers in the datacenter also. The thin clients mean that they have virtually no on-site end user support requirements - especially if the support company monitors their network switches, routers, firewall and network printers remotely. Sure they need to spring for high bandwidth internet access, but then most companies are doing that anyway these days. The only bandwidth hit is the keyboard and mouse data for each user, going from the user to the server, and the screen data coming back. All in all about 20kbps, or less, on average.
Some hosting companies will even go so far as to rent the thin clients and other devices to a Customer, meaning that there is little actual capital expenditure required to transition to this model of IT infrastructure and support.
Other hosting companies will even do the same (owning and renting out the hardware) when it comes to Clients that need to have PCs and laptops (due to user mobility requirements or else due to the need to work offline if the internet connection goes down for some bizarre reason - increasingly rare these days).
The benefit to the Client is that they only pay for what they use and this now becomes a predictable monthly fee according to the exact role of each person that is using the system (i.e. how many specialist applications they use). This provides a much enhanced ability to financially forecast for the Client - like what happens when they hire more people in this office, or shut down that remote location. The focus returns to the business at hand ...the costs of support, hardware and software can become predictable and directly scalable again. The technology fades into the background.
No more IT staff to hire, retain, keep stimulated and train on new things. No more health benefits and wondering what to do when they are sick or on vacation. No more "how do I get them to support the network , research a new CRM system for the sales force and upgrade the Accounting Package with the outside vendor - all at the same time?" No more "who the heck do I turn to if this person walks out tomorrow and never comes back?" (kiss goodbye to your career).
If you add a new server system, server application or do a significant upgrade then by all means expect to pay for the project - but at least in such a stable and controlled environment it should cost less than it would have if you has stayed with what you had before.
In my experience the average size of company (in Revenues or in # users) that is actively considering such a move, is quickly rising. The costs of increasing complexity required for a modern Client-Server network with communications, security and line-of-business applications are making it prohibitive for even medium sized businesses to go it alone. An excellent generalist internal resource is no longer enough, they are finding that they have to also bring in external consultants more frequently. The Software as a Service approach (often called Utility Computing too) is a way to reduce the costs to the end Client by allowing the hosting company (with application and business process expertise) to offset their own costs of infrastructure and experienced headcount across many Clients. Something to think about, if you just want to get back to your own business once more.
Now maybe the best that these Clients have ever had it in the past, is that they would have a fixed monthly support contract for a year or more. This would involve the support firm actually doing work on a weekly or monthly basis in the form of troubleshooting systems that were deteriorating in some way (running out of disk space, or losing available memory through a server application's memory leak, or a failing backup attempt) and ensure that the Client's network and systems stayed running. Note, that this is not a "retainer". This works well and ensures that the Client has taken some responsibility for the effort it takes to keep a modern network of average complexity up and running and stable over a lengthy perdiod of time. They also get to spend their money in a preventative fashion rather than reactively when they are going under for the third time ...when it always costs much more (ever had to call a plumber out at 3:00am for a burst pipe?).
But, when a piece of hardware actually fails (beyond the control of the support company) then it would cost the Client extra to have the support company come out, diagnose it and then ensure that either they, or a break-fix company, took care of it.
Then there were the recommendations for additional purchases (hardware and software to solve tricky little problems that either came up as part of the business or else when somethign else got to the end of its useful lifespan). Not as regular as clockwork, but if a Client hadn't had one for a while then they learned to start looking for your caller ID or the account managers car in the parking lot... This could often be softened if the support company spent the time with the Client's decision makers to help them analyse their spending patterns and then assisted them is setting an IT budget for the years to come.
Increasingly I am seeing and hearing the decision makers of companies (150-200 users and all the way down to 5 users) take a look at their options for paying for their Software as a Service (SaaS). This entails them running all of their applications, including their desktop productivity applications on the servers in a hosting company's datacenter.
The financial benefits are multiple. If the Client moves to all thin clients then they can pay a single fixed fee per user (according to the software that they are renting) and then a small custom application fee per user for the resources used by the Line of Business applications that they are already own (and want to maximize their ROI from) and that they have moved onto the servers in the datacenter also. The thin clients mean that they have virtually no on-site end user support requirements - especially if the support company monitors their network switches, routers, firewall and network printers remotely. Sure they need to spring for high bandwidth internet access, but then most companies are doing that anyway these days. The only bandwidth hit is the keyboard and mouse data for each user, going from the user to the server, and the screen data coming back. All in all about 20kbps, or less, on average.
Some hosting companies will even go so far as to rent the thin clients and other devices to a Customer, meaning that there is little actual capital expenditure required to transition to this model of IT infrastructure and support.
Other hosting companies will even do the same (owning and renting out the hardware) when it comes to Clients that need to have PCs and laptops (due to user mobility requirements or else due to the need to work offline if the internet connection goes down for some bizarre reason - increasingly rare these days).
The benefit to the Client is that they only pay for what they use and this now becomes a predictable monthly fee according to the exact role of each person that is using the system (i.e. how many specialist applications they use). This provides a much enhanced ability to financially forecast for the Client - like what happens when they hire more people in this office, or shut down that remote location. The focus returns to the business at hand ...the costs of support, hardware and software can become predictable and directly scalable again. The technology fades into the background.
No more IT staff to hire, retain, keep stimulated and train on new things. No more health benefits and wondering what to do when they are sick or on vacation. No more "how do I get them to support the network , research a new CRM system for the sales force and upgrade the Accounting Package with the outside vendor - all at the same time?" No more "who the heck do I turn to if this person walks out tomorrow and never comes back?" (kiss goodbye to your career).
If you add a new server system, server application or do a significant upgrade then by all means expect to pay for the project - but at least in such a stable and controlled environment it should cost less than it would have if you has stayed with what you had before.
In my experience the average size of company (in Revenues or in # users) that is actively considering such a move, is quickly rising. The costs of increasing complexity required for a modern Client-Server network with communications, security and line-of-business applications are making it prohibitive for even medium sized businesses to go it alone. An excellent generalist internal resource is no longer enough, they are finding that they have to also bring in external consultants more frequently. The Software as a Service approach (often called Utility Computing too) is a way to reduce the costs to the end Client by allowing the hosting company (with application and business process expertise) to offset their own costs of infrastructure and experienced headcount across many Clients. Something to think about, if you just want to get back to your own business once more.
posted by Gray Matter LLC at
10:22 PM
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