Software as a Service Reality - Case Study Example

? CASE STUDY ANALYSIS: SOFTWARE-AS-A-SERVICE GOES MAINSTREAM By number and of INTRODUCTION: There have been different changes and technological advancements in the workplace and industry. This in turn has resulted in increasing the competitive pressures on different organisations operating in the global industry. Apart from this, increasing globalisation has resulted in diluting the boundaries of the country and have integrated different countries and economies (Beck, 2000). For all of these reasons, the organisations are coming up with different strategies and solutions in order to manage the business effectively and efficiently. One of the biggest changes or innovations which has been implemented by different organisations is of the different software for improving the business operations, like Customer Relationship Management (CRM) and Enterprise Resource Plan (ERP) system (Holsapple & Sena, 2005). These software and Management Information Systems (MIS) allow the organisations to integrate the all components of the value chain and provide the customers with high value at the end of the process (O’Leary, 2004). There are different companies and organisations in the market which are providing the solutions of software and Management Information Systems (MIS) (Oz, 2009). However, a recent development in this regard is the new Software as a service (SAAS) model introduced by the salesforce.com (Laudon & Laudon, 2010). In this case study analysis an attempt has been made in order to explore and analyse the new software as a service (SAAS) model of salesforce.com. Along with this, the case study analysis presents different advantages and disadvantages associated with this new business model for software providers. Different challenges being faced by the management of salesforce.com in the process of providing this innovative service has been discussed along with the strategies and methods used by the management to overcome them. The report also outlines the different factors which should be kept in consideration while going for this new model and innovative service. Along with this the report also defines the businesses and organisations which can reap additional benefits by switching to the new software as a service (SAAS) model offered by the salesforce.com ADVANTAGES AND DISADVANTAGES OF THE SOFTWARE – AS – A – SERVICE MODEL: Salesforce.com has come up with a completely different model for providing different software solutions to the customers. This new and innovative model is known as the Software as a service model (SAAS). The Customer Relationship Management (CRM) services are provided by the company through online in the form of ‘software as a service’ (SAAS). This is totally oppose to the traditional concepts of the software solutions being provided by different companies in the industry, as customers are required to purchase those software and install them on the respective computer or machines. The software solutions provided by the traditional software solutions providers require a whole set of different hardware, operating system, servers for maintaining database, application servers for installation, and several other additional accessories (Laudon & Laudon, 2010). Another advantage of the Software as a service model (SAAS) of the salesforce.com is that it has been priced comparatively low than the other software solutions. Apart from this the installation of the normal or traditional software includes the additional cost of the licensing along with the regular maintenance cost. Along with this the installation of this new model of software only requires 0 to 3 months time period and there is no need of additional staff or consultants. On one hand the software is priced appropriately and on the other hand the organisations can avoid all additional hassle and cost associated with the installation of the software. The software is managed through a website online, which is regularly updated. Along with this the organisations can customise the software according to their need (Laudon & Laudon, 2010). Despite of all these advantages the major disadvantage of this new software as a service (SAAS) model is the issues of security and credibility. Many organisations are not comfortable with the fact that any third party is managing the data and the overall system of the company (Liston, 2008). Along with this in the initial phase, this new model of software as a service is not competent enough to address all requirements of the organisations with more complicated business operations. Also, according to different analysts in the long run the cost of the software as a service (SAAS) model is more than the other traditional software (OnlineCRM). CHALLENGES FACED BY SALESFORCE.COM AND WAYS TO OVERCOME THEM: Although the new software as a service (SAAS) model is being gaining popularity among different organisations and it is being believed that this new model will outclass the traditional software solution providers. But there are several challenges which are being faced by the management of the salesforce.com. The biggest challenge in this regard is of the increasing competition not only from the new entrants in the market but also the large organisations in the industry for several years. The company is not only facing high competition from the traditional software solution providers, but is also facing the threat of these large and established traditional software providers entering into the market segment of the salesforce.com. For instance, many large names like Microsoft, Oracle, and SAP have been entered into this new segment of market by introducing the Customer Relationship Management (CRM) systems based on the subscription and this new software as a service (SAAS) model. Also, there is high possibility that Microsoft will directly impose competitive pressure on salesforce.com by coming with a basic version of the on demand Customer Relationship Management (CRM) software. The existing market reputation and image of Microsoft will help the company in attaining high acceptability from the market. Microsoft can provide the similar solution in almost half of the price being currently offered by slaesforce.com. Along with these large organisations, some of the small scale organisations like NetSuite are also posing serious competitive challenge to the company and are heading towards decreasing the market share of salesforce.com (Laudon & Laudon, 2010). Another major challenge being faced by salesforce.com is the process of business expansion in other related fields and categories. Currently, the company is only offering limited sales and prospecting related solutions to the customers. The software and management systems of salesforce.com are mostly used by the organisations for the purpose of meeting the needs and requirements of the sales staff including prospecting, lead generation, and keeping database of customers and sales. In order to overcome this issue, the company has linked with Google in order to provide the customers with different additional services like Google Docs, Gmail, Google Calendar, Google talk and several others. This in turn will allow the customers of salesforce.com with the opportunity of performing several other tasks and activities online. Also, this partnership and collaboration with the Google, will allow the company to also face the increasing competitive pressure from large organisations in the industry (Laudon & Laudon, 2010). Salesforce.com has also collaborated with some of the providers of the software and have created a universal platform from where the customers can select and download these different software according to their needs and requirements. At the backend the company has provided with the individual providers of the software with the development application, so that their programmes and software are listed on the AppExchange for the customers. The company is also facing the major challenge of the availability. The customers of the company requires 24/7 hours service in order to make sure that software and the management system is running properly. There have been several incidents of outages, which in turn have resulted in creating serious questions for the customers related to the reliability of these online software services. In order to overcome this challenge, the company is using different applications and tools in order to increase the reliability and credibility of the online software service, and have also provided Personal Computer (PC) applications so that the customers can work while remaining offline (Laudon & Laudon, 2010). BUSINESSES WHICH CAN BE BENEFITED FROM SWITCHING TO THE NEW MODEL OFFERED BY SALESFORCE: Different organisations have been using the services of the salesforce.com and have subscribed to the new software as a service (SAAS) model. But the main question which is under consideration and being researched by different analysts is that what kinds of businesses can benefit from switching to the salesforce.com? As, the company specialise in providing the solutions related to the Customer Relationship Management (CRM) and sales management, the companies and businesses which are looking for effective and efficient tools for managing the sales and customer can opt for the services being offered by the salesforce.com. The solution being provided by the salesforce.com is mostly beneficial for the organisations who are conducting online business and are providing the customers with facility of online transactions. The software as a service model (SAAS) of salerforce.com is best suitable for such organisations in order to integrate the whole online process and with the backend database. This will also provide the organisation with the opportunity to provide the online customers with better and high quality customer services (Rayport & Jaworski, 2002). Apart from the online businesses, several manufacturing and other organisations are also using the services of the salesforce.com and are enjoying the benefits of the software as a service (SAAS) model. The organisations with more customer dealing and sales management are also preferring to avail the services of salesforce.com. FACTORS FOR SELECTING NEW MODEL OFFERED BY SALESFORCE.COM FOR BUSINESS: It is important for all organisations to consider several factors before going for the implementation of the new Software as a Service (SAAS) model. The most important factor in this regard is the security and privacy of the data and information. The information and data about the customers and sales is highly confidential and the organisations should make sure that only concerned people are able to view and access the important and confidential information (Lucey, 2005). Another important factor is to keep in consideration the budget of the organisation. The software as a service (SAAS) model is inexpensive in the initial phase, but eventually in the long run it ends up making it expensive in the long run. Also, the organisation is not able to get the copyrights or licence of the software being used for the customer relationship management. Other factors which should be considered while deciding whether to use salesforce.com or not includes the element of the availability of the database and software on 24/7 hours basis. As, it is highly important for the organisations to make sure that the software service is available all the time. Also, the organisations should make sure that the solution being provided by the salesforce.com can be integrated with other information systems and operations of the organisations. For instance, it is necessary to link and integrate the customer management data with the financial and resource management department and software. CONCLUSION: The new and innovative concept of the software as a service (SAAS) of the salesforce.com has completely changed the outlook and structure of the software industry. More and more organisations are using this online software service for the purpose of Customer Relationship Management (CRM) and sales management. Salesforce.com is facing increasing competition from both ends i.e. large established organisations in the industry along with the small new entrants in the market. Although, the new concept is being widely accepted but still there are several limitations and drawbacks associated with it. For instance, the biggest drawback in this regard is of the security of the confidential information and data of the company. Also, it becomes difficult to integrate all process and operations the company with the online software service of the customer relationship management. Salesforce.com is working in order to overcome all challenges and issues associated with the software as a service solution and taking considerable measures in order to make sure that customer base of the company is increased and customers are provided with high quality solution and credibility. Different strategies and tactics are adopted by the management of the company in this regard. List of References Beck, U 2000, What is Globalization? Blackwell Publishing Inc., Malden, MA, USA. Holsapple, C, & Sena, M 2005, ‘ERP Plans and Decision Support benefits’, Decision Support Systems, vol. 38, no. 4, 575-590. Laudon, K, & Laudon, J 2010, Management Information System. Pearson Education, Upper Saddle River, New Jersey. Liston. T 2008, Software as a Service (SaaS). Available from http://www.asconline.com/includes/podcasts/ASC_Podcast-Software_as_a_Service.pdf [Accessed 23 February, 2012] Lucey, T 2005, Management Information Systems. Thomson, Boston, USA. O’Leary, D 2004, ‘Enterprise Resource Planning (ERP) Systems: An Empirical Analysis of Benefits’, Journal of Emerging Technologies in Accounting, vol. 1, 63-72, Available from [Accessed 23 February, 2012] OnlineCRM. Software as a Service (SaaS) Reality. Available from http://www.online-crm.com/saas_advantages_disadvantages.htm [Accessed 23 February, 2012] Oz, E 2009, Management Information Systems. Thomson, Boston, USA. Rayport, J, & Jaworski, B. 2002, Introduction to E-Commerce. McGraw-Hill, New York. Read More