The Rise of SaaS and Cloud Computing

So perhaps SaaS may be usurped by another technological advancement, i.e. clouding computing.  Funny since SaaS was a great disruptor to traditional software –  software that is loaded onto the hard drive of each users computer.  Now the disruptor has become disrupted but is cloud computing superior as more aspects of computing migrate to the internet?

So we’re all clear on the terminology I’ve included some definitions of SaaS and cloud computing.

  • SaaS – software and the underlying data are hosted by a third-party and accessible by the internet
  • Cloud Computing – resources including software but also other sources such as databases and storage, are available for access over the internet

From a practicality perspective, it would be possible to say SaaS is a component of cloud computing as the cloud is ‘rather’ large.

SaaS, such as, tends to support organizations through third-party hosting, but allows multiple organizations to run under the same platform thereby optimizing the structure.  In similar fashion to outsourcing human resources, SaaS allows firms to specialize in a core business and allow other firms to specialize in CRM systems but could ERP and supply chain systems be further optimized as well?  Cloud computing in contrast could be any data hosted outside the traditional realm of the business structure.  As an overarching concept of SaaS, cloud computing is then the complete removal of data and software from the organizations hosting serves to the internet.  An aspect of public property also exists in the cloud.

As quoted from the article, High Tech: The Rise of SaaS and the Cloud: “Any company can move its existing warehouse management system or enterprise resource planning solution to the cloud; that is just outsourced IT,” says Trevor Read, president of Agistix, a Redwood City, Calif.-based provider of SaaS-based logistics and transportation software solutions. “SaaS architecture, by contrast, uses the cloud to support multiple companies running on the same instance of the software.”

The benefits of Saas and cloud computing over traditional software are obvious:

Cost Structure – for small and medium sized businesses, the in-house needs of software administration is removed, allowing for reduced costs.

Simplification – a company’s internal CRM and ERP systems are hardly simple, but it is possible a firm specializing in the system could optimize based on core competencies.

Scalability – related to simplification above, specialized firms operating SaaS or cloud computing might be able to simplify the system sufficiently to allow it to scale from small to large firms.  However deployment is certainly an aspect where both SaaS and CC already excels at scalability through increased flexibility.

Efficiency – again, by removing a system from within a firm, a firm that by nature does not specialize in ERP or supply-chain systems might allow for increased efficiency.  This might be obtained through multiple organizations utilizing one system that is able to specialize in just the third-party platform.

Visability – this is one area that may benefit more from CC, as the public access would allow customers and vendors the ability to see and track their interactions with companies (ERP) and/or their packages, goods, etc. (supply-chain).

How much more information will we as individuals and organizations move into the cloud as we increasingly abandon traditional forms of computing and information storage?  Is moving an ERP or supply-chain system to third-party hosting really a good idea?



About Jason B
Boston College, Carroll School of Management Class of 2013.

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