Field Service Turns To SaaS
by Brian Albright
Posted: 11/2010
SaaS solutions are increasingly popular with companies trying to trim their IT expenses. In field service, where end users are already located remotely, the model is rapidly gain- ing in popularity as well. According to Gartner, the overall market for SaaS solutions worldwide is expected to grow 14.1% from 2009 to 2010. In the field service space, at least 18% of new application components will be sold as SaaS subscription mod- els, rather than as on-premise solutions, up nearly 6% from 2009.
Avoid Large Capital Outlay With SaaS Model
“We are finding two critical factors in those that are looking for Web-based solutions, number one being the convenience to perform business any- time from anywhere, allowing all employees to be able to do their jobs and have access to data without needing to be tethered to the office,” says Christopher Chapman, COO at ServiceCEO. “The second biggest factor we are seeing is that the pay-as-you-go model is more attractive than a larger up-front purchase of licensing to many of our clients.”
Under the SaaS model, multiple users access the same hosted software solution, paying for access rather than actual software seats. This saves money on the front end by reducing installation costs, but also reduces back end expenditures by lowering internal support costs. “SaaS/hosted field service solutions are becoming increasingly more attrac- tive to smaller companies because it gives them the capability of utilizing solutions that larger compa- nies use, but at a fraction of the price,” says Mark Homer, chief sales and marketing officer, ServicePower. “Plus with SaaS, there are no hard- ware setup costs.”
Cutting Costs With SaaS
The primary force behind SaaS adoption has been cost savings. Because SaaS solutions reduce instal- lation and support fees and save users the expense of deploying new servers, field service companies see hosted solutions as a way to stay in the black even during a poor economy. The up-front fee for some on-premise solutions could buy a company several years’ worth of hosted application access for a similar number of seats, and that doesn’t even include hardware and support costs. “There’s a sig- nificant cost savings when you consider the pay-as- you-go subscription model,” says David Yarnold, CEO of ServiceMax. “Instead of putting out a huge chunk of cash at the start, you only pay for what you need when you use it.”
According to Homer, users could see a savings of up to 1/3 of the typical cost over a period of three years. Determining exactly what that savings might be does require some math on the part of the end user. First, determine how the hosted solution ven- dor charges for usage, and then analyze current usage of the on-premise solution (if you have one) and compare that to the per-unit fee (whatever that “unit” may be) of the hosted solution. By extrapo- lating that over the course of a year, you can calcu- late an approximate cost savings. “Most of our cus- tomer base do not have full-time IT staff, so they bring in outside service companies to assist with any IT and networking setup and troubleshoot- ing,” Chapman says. “They also have to purchase servers, Server OS, SQL licenses, etc. with our on- premise solution. With our SaaS offering, they are seeing an $8,000- 15,000 return on invest- ment from day one by eliminating all of these needs.”
For hosted solutions to work, though, end users have to have a reliable network provider. It’s difficult to use a hosted solution if you have poor wireless coverage or your Internet con- nection is not fast enough to download content from the solutions provider. Still, field service companies have become far more comfortable with the security and reliability of these solutions. “It used to be that IT departments considered SaaS to be the enemy,” Yarnold says. “They were dedicated to the bloated Oracle/SAP ERP model and didn’t trust SaaS. But now that’s completely changed. Because of the success of companies like Salesforce.com, cloud solutions are considered strong and secure.”
Field Service: Into The Cloud
The next evolution for hosted solutions is the move toward cloud computing. Under this model, software is licensed on a subscription basis from the vendor, and the IT hardware infrastructure is “rented” from a utility computing provider via an on-demand arrangement. This can provide cus- tomers greater control over their own data, since it resides on their own rented IT infrastructure, rather than the software provider’s.
Cloud computing can make these solutions even faster and less expensive to set up and provides even greater functionality to smaller and medium sized businesses (SMBs). “Very broad and deep solutions previously only available to large organi- zations are now available to SMBs,” Yarnold says. “This is because of the lower cost, ease of implementation /maintenance, and license subscription model. And it’s given SMBs revolutionary functionality.”
Homer points out, however, that there are both pros and cons to moving to the cloud. “For example, it has potential trust issues,” Homer says. “If you choose to go down this route, there has to be a great deal of trust between you and your cloud vendor, because you are entrusting the vendor with your company’s security. Overall, the most important issue is security; companies need to check a vendor’s data center security, security defenses, and the quality of its IT staff.”
According to Yarnold, though, cloud computing will further revolutionize field service and provide even greater benefits. “Cloud-based field service solutions that manage everything from entitle- ments to workforce optimization are completely changing the way people think about their field service business,” he says. “Because they’re now able to leverage the cloud, organizations can really reinvent their postsales operations to generate revenue while keeping customers happy.”
