Low Cost Business Startup Model via SaaS
The terms SaaS and “Cloud Computing” have been bandied around a fair bit of late by the media who seem to be more focused on the hype and a good story rather than the practical reality. Cloud Computing is a term I am like a lot of IT professionals trying to avoid at the moment since it is not really that well defined and usually better described by phrases like “Outsourced Infrastructure” or “Virtualization” with some discussion on fault tolerance and lack of specific location thrown in.
SaaS or “Software as a Service” on the other hand can be simply described as the practice of renting out software which is usually accessed remotely via the internet rather bought as a “shrink wrap” product in the traditional way. With web user interface technology evolving into something more capable along with decent speed internet connections being available to most businesses these days – SaaS in my opinion is about to substantially change (and potentially already has) many organizations’ approach to information technology.
SaaS removes the need for an organization to buy software and infrastructure to run it on, as well as maintain in-house or contracted on-site capability to install, maintain and upgrade it every few years. Businesses can usually just turn on the software by subscribing online, then using it via a web browser. Upgrades just happen, and there is no need to spend any money on servers or related infrastructure or integration with other systems as this is all included.
From a pricing perspective there are also some interesting effects. Usually with SaaS offerings organizations just pay for what they use functionally or by the number of transactions – but all benefit from an enterprise level architecture and technical team supporting the software no matter what the size. This means that a small organization potentially gets the same level of technical support, redundancy and backup as a large one – for a price that reflects usage rather than the cost of high end equipment. SaaS can be a real equalizer for a small business trying to carve a niche against a bigger player.
From a SaaS services provider’s perspective, the service they provide can (if designed appropriately) be available worldwide from day one as well. This means that a small New Zealand provider has the potential to disrupt a much larger US based provider, and potentially take advantage of lower cost labour locally but still target larger markets. It is much harder to do this with a traditional product led approach which requires distributors, and a larger commitment vs the free trial and/or monthly based billing offered by SaaS providers.
So what does this mean for the average small start-up or run from home type business? Effectively it means that for a small monthly outlay, they can have most of what the bigger players have in terms of technology for a potentially smaller monthly outgoing. A lot of these SaaS applications are also integrated together out of the box – this means it is even possible to build up a kind of basic ERP system usually only able to be afforded by large organizations.
It turns out New Zealand actually has quite a few budding SaaS providers and with a closer look it is easy to see the potential for combining these together to great effect in a small or not so small business – established or in start-up mode.
Imagine a virtual, serviced or home office – the only real requirement is a PC (preferably a laptop), a SIP based IP Phone (those from Linksys works well) and some sort of Internet connection. You should then be able to put together a business with all the usual tools using service offerings with a monthly fee lower than the comparable off the shelf product from some of the following providers – and I am sure there are others.
2Talk – offers phone lines and local numbers over the internet. Imagine an 04 wellington based number that rings on your laptop or SIP phone anywhere you are and cheaper than the equivalent fixed line offering, particularly if you can unbundle your internet and phone services.
Xero – Handle all your accounting online via your web browser, integrating with your bank for reconciliation and even allowing external advisers to get involved without having to visit you in person or pick up bundles of paperwork.
Google Apps – for a small annual per user fee, you get enterprise class email and a very basic set of word processing, intranet creation and file storage tools. The big saving here is avoiding having to buy an expensive Microsoft office licence (usually the one containing Outlook mail client) for each staff member as well as all the drama, and expenses associated with running your own mail server infrastructure.
It comes with pretty good spam filtering as well, and the word processing tool allows more than one person at a time to edit the same document, although only with very basic features compared to the likes of Microsoft word. Microsoft is offering something similar, which I haven’t had an opportunity to try but does look to be a little more expensive at first glance.
For staff performance management and payroll management there are also quite a few decent offerings some of which integrate with Xero above including Sonar6 and Smart payroll which might be useful if you have a lot of staff to manage. Other interesting tools in areas such as compliance via mangolive and workflow and invoicing products for those charging by the hour like workflowmax .
There are also a few CRM type tools out there such as SugarCRM which are worth a look, but can be a little expensive compared to the New Zealand equivalents – but invaluable if you have a large opportunity pipeline to manage. In the medium term I’m also hoping to add online regulatory and professional assessment to the list, via the company I currently work for Aspeq – but for now watch this space.
Suffice to say, before you run down to your local software shop and buy a bunch of shrink wrapped products for your business – its worth looking at what is available “for rent” online. You may find yourself pleasantly surprised at what they can do, how they work together, and the absolute lack of requirement for an army of in-house IT staff and expensive infrastructure.
November 18, 2009 7:08 pm 
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