«

»

Nov 25 2009

Print this Post

SaaS to grow (again)

The Construction Software State of the Industry Report, produced by US-based firm Software Advice, is highlighting five trends (three of them upwards), relating to software buying habits, and suggests that the current recession makes Software-as-a-Service-based solutions even more attractive:

Software as a Service is in the right place at the right time
Software as a Service (SaaS) is gaining momentum in many software markets. In fact, we would agree with other IT prognosticators that SaaS is a major structural shift in software deployment and is here to stay. We’ve seen this model succeed in the project management segment where there is a clear need for the collaborative benefits of web-based software. Moreover, the current recession is making the SaaS model more attractive to contractors because:

  • Subscription pricing can easily be added to a project’s general conditions;
  • Low up-front costs allow project managers to avoid an onerous approval process; and,
  • Faster and less expensive implementation makes the new systems more digestible.

We have not seen much demand for SaaS accounting, estimating or service management, although we do get asked about it now and then. We also have not seen many vendors emerge to deliver that sort of solution. We would not be surprised to see SaaS accounting and/or estimating solutions emerge over the next few years.

My perspective

Having spent most of the past ten years focused on SaaS solutions for the architecture, engineering, construction (AEC) and property sectors, I have seen numerous analysts predict continued growth for SaaS, both generally (post) and for specific industries such as construction. The recession will certainly be a factor, and the emergence of numerous start-ups offering low-cost SaaS-based file-sharing – see post – is perhaps an indication of this trend.

(I feel a little uneasy about this sudden profusion of low-cost solutions. It reminds me of the days before the dot.com implosion when it was estimated there were over 200 suppliers of ‘project extranets’. Many of these soon disappeared, but the dot.com crash was a sobering reminder of the need for customers to make careful checks that providers have resilient hosting infrastructures, robust finances and appropriate contingency arrangements to help maintain services supporting what are often mission-critical construction projects. Good technology is not enough – you need confidence that a vendor will provide a reliable 24/7 service right through to hand-over of the project, and maybe beyond.)

Some of the established SaaS construction collaboration vendors are moving towards provision of richer levels of functionality to support parallel or back-office processes such as accounting (in the process, this also helps differentiate themselves from those offering basic file-sharing solutions). For example, German provider conject recently talked to me about its cash-flow planning module, and [my former employer] BIW Technologies has its own Financial Control application, offering integration with conventional back-office accounting systems.

Some SaaS collaboration providers (eg: Aconex, Incite, Asite, Business Collaborator) also offer APIs, potentially enabling customers and developers to build their own applications, integrate enterprise systems and/or access project data from other SaaS solutions, which might include accounting or even more fully-featured ERP platforms.

I personally use SaaSu for my own SME’s financial management, but am aware of SaaS accounting systems developed by vendors such as Business Collaborator’s parent Coda, plus Xero, Kashflow, MYOB, Intuit and Sage, among others. Some of these SaaS applications are still not fully-formed yet, but as they mature I expect cost-conscious construction company finance directors may well be tempted by some of the potential efficiency savings offered by secure hosting of their data ‘in the cloud’. Equally, perhaps we will see some of the more construction-oriented finance solutions (eg: COINS, Sage’s Timberline) available on a SaaS basis.

Permanent link to this article: http://extranetevolution.com/2009/11/saas-to-grow-again/

3 comments

  1. Rob Mathewson

    The move to SaaS applications in construction is a natural one for this inherently conservative industry. As a matter of fact, if it were not for our recent financial crisis, contractors might continue to lag behind in SaaS acceptance.
    Even though SaaS acceptance is gaining in construction, the bulk of product offerings are still in the 1.0 phase – former shrink-wrap applications delivered over the web. I predict more interesting applications will pop up over the coming years that feature applications that leverage mult-enterprise collaboration (e.g. a construction project team)in order to deliver huge productivity gains.

  2. wsmith@thecramgroup.com

    Nice Article as usual…
    Couple Comments:
    Original>>Subscription pricing can easily be added to a project’s general conditions;
    Response>>So can any other method (IE, non SaaS) if the service provider understands how to finance the solution costs. If you are not looking at a 3 to 5 year plan then I would be curious what sort of company you are running. In a proper ROI analysis, non-SaaS with Concurrent licensing will almost always win out (over named, SaaS Named, SaaS Project Based, Etc..) from a cost perspective, and pretty much every other perspective (Governance, Flexibility, etc…) unless there is some app specific functionality you can’t live without.
    Original>>Low up-front costs allow project managers to avoid an onerous approval process;
    Response>>There is a reason for “onerous approval processes”, they are generally essential to IT cost mgmt, and if you skip them as a vendor providing the solution, you are merely getting in at the project level (under the radar) and potentially wasting lots of time as you stand to get tossed out anyway when the shxt hits the fan at corporate level.
    Original>> and, Faster and less expensive implementation makes the new systems more digestible.
    Resp>>SaaS generally has nothing to do with faster or less expensive. The application administration and feature implementation will not be any different for SaaS or Non- SaaS (you still have to do a proper implementation cycle), and the systems deployment will not be any different than having it done via Hosted/Cloud services (Potentially worse due to flexibility issues of SaaS). It really boils down to the service provider doing the implementation/deployment, not whether it is SaaS or non-SaaS. Pick a trusted provider.

  3. PaulWilkinson

    I didn’t particularly comment on the reasons put forward for SaaS.
    However, the first one is something that has been debated at length previously in this blog – particularly in relation to the overall total cost of ownership argument.
    The second one has relevance particularly where project managers want to test something out that would otherwise be blogged by central IT team. As with other technologies, sometimes a product has to be introduced from the bottom up rather than imposed from the top down to become accepted.
    The final one may relate to whether or not the customer needs to install any hardware to run its software. For non-SaaS, implementation can therefore be considerably longer than for a SaaS where no hardware purchase, configuration, etc is required. Another factor will be the extent to which the application can be configured to meet a customer’s requirements. Some organisations have become very effective at deploying SaaS technologies to suit a wide variety of project types, either for their own business (eg: as a contractor or a project manager) or for other customers (perhaps where the project manager is providing the ultimate client with SaaS configuration, training and support services instead of the SaaS developer).

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>