What is SaaS and the connection to digital transformation?
Jan 06, 2020
What is SaaS and how can it help your energy company transform?
SaaS has been picking up momentum over the last decade, as companies from Spotify, to Google, to Microsoft evolve their products and services to keep up with changing buyer behaviours.
Over the last few years the uptake of SaaS has also increased in the energy sector, alongside greater competition and a need to be ever more agile when it comes to delivering customer satisfaction and continued success.
As with any complex purchasing decision, vendor choice is just one of many factors to consider. So, how do you know if a SaaS platform is the one for you?
In this article, we break down the question ‘what is SaaS?’ and define some relevant elements for small to large to companies.
First things first. What is SaaS?
SaaS stands for Software as a Service.
It’s a method of software delivery through a web-based app or web browser. Meaning the software simply requires a log in to gain access. It is not bought and installed onto hardware, and instead is delivered to the user as and when they need it.
For example: you load up your browser, you search for the software you want to use, you set up an account, you log in.
What does the service part involve?
The service part involves the provider maintaining the software on your behalf and across their customer portfolio. This includes upgrades, patches, general maintenance, troubleshooting and developing the software as it advances through its lifetime.
Because SaaS brings zero investment in complex hardware to the table, this also means you don’t have to endure site visits from providers to maintain the service-side. Everything is managed online.
What is an example of a SaaS product?
Spotify is a good example to use. Say we both have Spotify. Any changes made to the platform we both benefit from. Any updates, feature changes, technology advancements etc., we both have access to.
There are only slight differences in the product if one of us pays to advance to Spotify Premium or a Spotify family linked account. Extra features and privileges are then offered alongside the original account.
What’s the difference between investing in SaaS and On-premise?
Investing in on-premise IT infrastructure as a company requires the buyer to purchase a license to use the product.
Maintenance costs are then usually added on top, which can increase the cost by 15-20%.
SaaS only requires an annual or monthly subscription to the software. With this, the buyer gains the software license, maintenance, troubleshooting and upgrades included in the bundle. This allows the costs to be spread throughout the year.
How do I decide between SaaS and on-premise?
Deciding between SaaS and on-premise can involve understanding the complexity of your organisation. It’s worth considering your size, cultural behaviours, the industry sector you sit across and even what your competition are doing, before diving into an option.
If your company strategy is to digitally transform your current tech stack and you’re considering moving to SaaS, there are a few things to consider.
Do you have the correct skills inhouse to work with a SaaS platform? What are the implications of migrating to a SaaS platform? Does SaaS answer your technical challenges? Will the move benefit your customers?
Other aspects to consider are the cultural variables. Is your workforce in the right mindset for this type of change? Has this been a top-down approach, or bottom-up? What training will be required? Are your employees/colleagues open to change?
So I have the same platform as my competitors… right?
For some providers, it may be the case that you have the same SaaS platform as your competitors. Which means your business strategy, brand image, customer messaging and product or service offerings must set you apart from your competition.
Technically differentiating yourself from your competitors will already be one of your main focal points, however, it also means finding a SaaS platform that has all the basics you require.
If you provide specialised tariffs or services, making sure your SaaS provider can support this should be a priority.
SaaS solutions may not always provide all features required on your wish list. What's important is that you find a solution that meets the majority of your generic, non-unique requirements, so that you have the freedom to devote time to focusing on the things that make you different and have a positive impact on the customer.
In a separate article, Buy versus Build, we quoted CIO.com, who articulated this point:
“Assuming normalised fit scores where 100% equates to fully met requirements – a score of at least 80% or more will mean ‘buy’ is generally advisable”.
There is a world in which SaaS and on-premise can work in harmony, however this does depend on your criteria. Investing in SaaS makes sense if you value speed to market in order to reduce impact on your customers. You’d also be gaining better cost-effectiveness and ease of accessibility too.
What happens if my vendor goes down?
A fair and legitimate concern, but something you can curtail in your Service Level Agreement (SLA). The data is yours to keep, so you can state this in your SLA. SaaS providers will usually have strong safeguarding however, to keep you and your company safe.
SaaS vendors will have a strong utilisation Infrastructure as a Service themselves, i.e. SaaS vendors procure their own SaaS solutions too. Take ENSEK for example – we’re experts at energy, software and data; we’re not experts in hardware, network infrastructure or data centres, nor do we want to be distracted by that and lose focus on what we’re good at.
What are the key benefits of SaaS?
SaaS platforms are designed to give you an agile platform that can act as a foundation for growth. As your customers needs change, SaaS takes away the generic, non-discretionary challenges of your business and allows you to focus on your customer, freeing you up to react, and more importantly, proactively act on upcoming changes and emerging opportunities in your market.
Many SaaS platforms in the energy sector are API-driven. If you have other tools that you use (Salesforce, VISA etc) in your tech stack, APIs help you connect these to together with minimal effort. Check what partnerships your SaaS provider has too, as this could strengthen your platform if they already partner with one of your suppliers.
If your aim is to reduce your total cost of ownership, then this could be a legitimate option for you as an energy supplier. SaaS gives you the option to lower your in-house full-time employment (FTE). With a lack of complicated IT infrastructure to coordinate and a team running the services behind the platform, your out-going costs are reduced.
How do I break this down further?
If you're interested to understand more, take a look at the article 11 Things to Consider with Complex Software Purchasing in 2020. It begins to break down what you need to think about to pursue your digital transformation strategy.
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