In a very short time, on-demand has evolved from being perceived as a unique way to deliver point solutions, to acceptance as a viable model for deploying and managing mission-critical applications. Indeed, both Gartner Research and AMR Research are projecting growth of SaaS to be twice as fast as the overall enterprise applications market through 2011.
On-demand, outsourced IT models, such as application service provider (ASP), business process outsourcer (BPO) and managed service provider (MSP) have become fairly common. But true on-demand delivery of enterprise applications has only recently gained traction - fueled in part by improved communications availability, security, reliability, bandwidth and development methodologies that support the SaaS model.
Companies are increasingly evaluating the potential for SaaS in the manufacturing part of their businesses. Enterprises that embrace the on-demand model expect the benefit of having an application wherever and whenever they need it. They don’t want the hassles of managing the applications, installing the hardware and providing internal support. With promises of strong return on investment, low overhead and rapid application deployment, on-demand solutions have begun to skyrocket in popularity.
Another important perceptual shift is the recognition of the IT function as more than a “cost center.” Today’s CIO needs to be a strategic visionary with a profit-based mission. As such, the CIO needs to offload non-value-added tasks such as application patching, maintaining customizations, executing upgrades and the day to day tasks of system administration.
SaaS presents opportunities to cut costs, reduce risk and ensure business continuity. On-demand can help a CIO do more with a leaner organization and better manage the IT infrastructure. By diminishing the risks of switching ERP vendors, on-demand also becomes a viable replacement strategy when it’s time for a new ERP system.
More Flexibility & Scalability; Less Cost & Risk
Stable communications costs, improved reliability and better security engender greater flexibility in the delivery of enterprise applications across an enterprise and give businesses more choice. Organizations can choose to centralize an instance of software regionally, or occasionally globally, depending on their ability to implement the necessary communications networks.
With recent improvements in communications, the on-demand model is now a more viable alternative. Consequently, executives are turning the corner and becoming more comfortable with the idea of having their enterprise data reside outside the physical walls of their company.
For small and medium businesses, on-demand offers a simpler and less expensive means to get enterprise-class functionality. They can get the benefit of the software without the burden of supporting it, and easily scale it up or down as needed.
New or rapidly growing companies can also leverage the on-demand model to help reduce startup costs and offer faster time to market, while also insulating against downturns. And, the on-demand option gives larger enterprises the resiliency they need to respond rapidly to changes in customer demand, choose where to produce products and scale their businesses accordingly.
IT organizations can reap significant strategic benefits. There’s less risk in deploying an on-demand solution quickly than there is in investing a lot of money in scarce internal resources.
The hybrid approach removes the burden of maintaining IT resources and skills, circumventing staff shortages while keeping the IT organization lean. Reducing or eliminating the requirement to maintain talent alleviates the risk of talent drain, especially critical for smaller businesses.
Fewer servers for the IT department to maintain, reduced in-house maintenance expense and easy software upgrades add up to tighter control of the IT budget and less capital to shake loose from the CFO for software licenses and hardware. The cost structure of the deployment-independent approach reduces underlying costs across the business.
Why Deployment Independence?
In developing areas, an exclusive on-demand model may not be practical; telecommunications may not be reliable, or can be too expensive. For example, in remote regions of China, Latin America and even some territories in Eastern Europe, it’s still not practical to connect to a third-party data center because of issues with telecommunications.
Manufacturers who operate in remote or undeveloped regions face a paradox; they could reap significant advantage and benefit from on-demand application deployment, yet lack access to the necessary communications infrastructure.
These manufacturers can benefit from an on-appliance delivery model which involves preloading the software on a dedicated machine that is managed and maintained by the software provider.
This delivery model requires only a nominal on-site IT presence to make the final install and boot up the system, to report problems and act as liaison with the business users.
An enterprise that opens a new plant in a remote region of China doesn’t have to worry about training a local IT team and can launch operations very quickly with world-class software. And, this option offers an easy answer to any lingering concerns about security.
Deployment independence allows companies to choose how they want to deploy their applications: on-demand, on-appliance or on-premise. Companies can leverage different deployment models, or switch between models as they like, without damaging system integrity.
For example, an enterprise can use the on-appliance model to get a new site up and running quickly or choose on-demand deployment to fill in gaps in their in-house application.
Global enterprises can leverage deployment independence to maintain system integrity at sites in diverse geographic areas, regardless of the viability or sophistication of local communications systems.
Deployment independence gives manufacturers more options as business needs change. Enterprises can quickly ‘switch on’ new plants and acquired businesses. Employees, customers and supply chain partners benefit from this ability to adjust quickly to changing requirements; the enterprise can easily scale up or down as external and internal requirements evolve.
Most importantly, manufacturers are free to focus on their core competencies and the unique processes that make a real difference to the business.
- Costs trimmed across the enterprise
- Risks mitigated or eliminated
- Improved management of IT talent
- Faster go-live with short time-to-value interval
- Minimal effort needed to plan and execute implementations
- Additional infrastructure not required
- Corporate standards and version compatibility ensured
- Significant reduction in local resource allocation
- Easier mobility and scalability
- Capital expenditures reduced
- Simple, cost-effective upgrade path
- Devote more focus to true core competencies - manufacturing!