High-level view - Cloud/Software as a Service report May 2012

Manufacturing & Logistics IT spoke with a number of leading players within the Cloud/Software as a Service solutions and services arena about recent developments within this increasingly talked about and embraced deployment model.

It doesn’t seem so long ago when the terms Cloud and Software as a Service (SaaS) were fresh off the press and, to a large extent, not fully understood by many prospective end users in various vertical marketplaces. Things have certainly changed considerably over the past two or three years. Now there is a growing portfolio of solutions available in the Cloud, and an increasingly widespread group of users are becoming more aware of the benefits the Cloud/SaaS deployment model can offer their businesses. Indeed, many are becoming increasingly confident about embracing it as a core element within their IT methodologies. But, as with any area of valuable and widely utilised technology, developments continue apace. To plot many of these recent changes and enhancements, we spoke with some of the leading vendors and service providers within the Cloud/SaaS space to discuss everything from current benefits for the manufacturing and logistics sectors, to remaining concerns and reservations, as well as a look into the near future and what further developments and resultant benefits might await readers of this journal.

But, to begin, let’s consider what our commentators consider to be the key benefits of the Software as a service (SaaS) deployment model. Mark Breeden, general manager at Qurius, considers that the main advantages are flexibility, scalability and pricing. “SaaS is quickly scalable; you can add users and functionality in seconds,” he said. “Because it is based on a standard environment, the management is easy and cheaper than on-premise environments. SaaS enables you to free up local resources to concentrate on your business rather than the IT management of complicated platforms to run your critical business systems. You are leaving it to the experts to manage. It also takes care of a large chunk of your disaster recovery plan with very little further effort as essentially you have outsourced your critical, complex and complicated-to-manage systems. This is not only in terms of management but also geography, as access to your system is no longer governed by a location.”

 

Ease of use
And what of the financial benefits? Charlie Pesti, country manager at Transporeon, makes the point that the SaaS model can offer a significantly quicker return on investment. “Everyone pays as they go,” he said. Pesti added that business conditions change faster each year, and this scenario requires more mobility, flexibility and up-to-date information. “Users need to get access to global information and need to be able to edit those regardless of their geographical locations, regardless of the spoken language and regardless of the device they actually have on hand,” he remarked. Again focusing on the financial benefits, Johnny Hughes, commercial manager at Ortec, makes the point that the SaaS model eliminates the need for large, upfront investments. Furthermore, he adds that the total costs of ownership (TCO) are lower as there is no need to install the software on each workstation, even at home. Additionally, Hughes comments that SaaS offers greater ease of use as customers are paying for a service and receive updates automatically.

Gavin Clark, commercial director at Snapfulfil, maintains that SaaS allows companies to utilise highly sophisticated software solutions within their operations, deployed from ‘state of the art’ data centres, with first-class levels of response and support – and all delivered in a condensed timeframe and at a cost effective subscription. He adds that accessing this level of resiliency and security for a single system is usually only available to the major corporate businesses. “In some cases, when the SaaS deployment model is fully embraced by the vendor and the implementation services are provided as part of the monthly subscription, then the removal of cost barriers makes for an even greater benefit,” he said. Clark also commented that cash flow and borrowing difficulties are major factors for small- to medium-sized businesses at the moment and can prevent many businesses from accessing the systems they need to drive growth. “SaaS helps to break this ‘Catch 22’ for all sizes of operations,” he commented.

Division of responsibility
Are there any notable pitfalls or constraints associated with SaaS deployment? Breeden explains that proper consideration needs to be taken regarding the local integration requirements needed to work with a Cloud solution, as inevitably there will be some processes or devices that require integration. He adds that a full technical review/audit needs to follow the user’s strategic decision to move to the Cloud in order to ensure that integration, network, bandwidth and access requirements are all taken into account and dealt with effectively. Hughes comments that, in Ortec’s experience, it is important to make sure there is a clear (contractual) division of responsibility. “If not, then in some cases companies will point the finger at each other, which is something you’d want to avoid,” he said. Clark reflects that, with the constant improvements in communications that are vital to most aspects of business, then the areas that are traditionally highlighted as pitfalls do not really concern the modern business. “As with any software system, the pitfalls rarely lie with the delivery method, but often with the vendor,” he said, making the point that prospective end users should ask themselves: Does the vendor have the right experience? Does it offer a resilient and reliable product/service? Can we see the vendor’s solution working in other environments similar to our own?

What have been some of the most notable recent developments/improvements within the SaaS marketplace? Pesti comments that, as the Internet made possible the evolvement and extremely quick development of different social networks such as LinkedIn and Facebook it also made it possible for SaaS service providers to deploy their solutions quicker. “And that resulted in shorter project times,” he said, adding that it also made it possible for end users to log in to their electronic organisation and reach all the functionalities over the web regardless of their actual geographical location and regardless of the computer device – portable or non-portable –  they actually had in their hands. Pesti also made the point that the user interfaces are more user-friendly now. “No computer programming is needed anymore to tailor make the user interface that best satisfies the user,” he said. Clark considers that some of the most notable developments have been improvements in database technology, VMWare and other supporting infrastructures. These, he points out, have enabled many SaaS vendors to improve their background platforms. “Continued increases in broadband speed and networks can only help to improve the services received by all Internet users,” he remarked.

Greater affordability
According to Breeden, the market as a whole has made great strides in terms of both the products supplied and the platforms they run on. “With virtualisation technology, the systems are more efficient as the resources are fully used and evenly spread,” he said. “This ensures not only ‘greener’ data centres but a far higher degree of high availability, resiliency and redundancy. This means that moving servers between hosts in the event of a hardware failure or maintenance requirement can be done ‘live’ with no disruption to the end user.” Another big leap forward, reflects Breeden, is the improvement and greater affordability of communications links, as, he states, “any SaaS model is useless without a decent connection”. Breeden continues: “Functionality is added rapidly; therefore the SaaS model is becoming more and more complete for the infrastructure needs of customers.”

From Ortec’s perspective, Hughes comments that even though most of the company’s customers still choose to invest in its software, because of its fast ROI and other advantages, Ortec has noticed a certain shift in the market. Hughes adds that the demand for optimised deployment of staff and resources through Advanced Planning Systems (APS) will keep growing. “That is a worldwide trend,” he said. “Many companies use Ortec software as a basic solution because with our optimisation software they are generally better equipped than other businesses to confront the challenges posed by the current economic climate. When adding functionality (integration with other systems), they tend to prefer Software as a Service because of its flexibility and the manageable monthly costs.” Hughes added that, in general, Ortec identifies improvements in the performance of SaaS. He also made the point that some companies, including Ortec itself, are able to offer an improved Cloud-based infrastructure.

Critical business systems

In terms of different types of software application and functionality available as SaaS, what is currently receiving the most uptake within the manufacturing, logistics or retail space, and what is likely to become increasingly attractive in the near future? Breeden remarks that there has been a big surge of interest and subsequent uptake of moving organisations’ critical business systems into the Cloud. “What I mean by this is that users are receiving ‘desktops’ wrapping up all their key applications and software neatly together,” he said. “This ensures that integration of applications and software is controlled, as essentially they are functioning together in the same place. This means outsourcing not only particular applications and software but your entire system is achieved, and internal knowledge and skills are no longer required to manage and support what is often a very complex environment.” Specifically with regard to Ortec, Hughes comments that the most popular or favoured area of software functionality currently seeing most uptake as a SaaS application is Ortec’s software for Workforce Scheduling within the Professional and Public Services sector. “Several customers in both the Netherlands and Belgium are using Ortec’s Workforce Scheduling as SaaS,” he said, adding: “Next to that, Ortec’s Field Service Planning Solution looks set to become a really popular SaaS application.” For Pesti, it is important that people must not forget that the logistics industry more than any other is about human-to-human communication. “We’ve got to start with this and work it back towards the technology – not the other way around,” he said.

What are the most buoyant vertical sectors with regard to uptake of SaaS applications? For Clark, the often explosive growth exhibited by e-commerce businesses is a greater challenge to a business than many expect. “Triple-digit growth creates a demand on the supply chain that many businesses are not experienced in handling,” he said. “They are therefore in the market looking for a sophisticated system to provide best practice functionality, that will grow with them, but is fast to deploy and doesn’t require substantial (and often long-term) financial commitment…the key benefits of a SaaS solution.” Hughes explains that Ortec operates within various industries: consumer packaged goods (CPG); retail; transportation & logistics; oil, gas and chemicals; professional and public services; healthcare; manufacturing and construction. Within these industries Hughes points out that Ortec offers optimised fleet routing, vehicle and pallet loading and workforce scheduling solutions. Hughes adds that SaaS is also proving popular in the professional and public services space, including government services to keep costs under control. Pesti comments that he has held the believe and vision since first joining Transporeon ten years ago that every transportation and logistics company making more than 50 deliveries per day will manage their operations with the type of solution Transporeon offers. “My job is to position Transporeon at the right time into the right place,” he added. Breeden explains that Qurius services a number of different vertical markets with SaaS solutions, one good example being the holiday park industry. “This is happening for a number of reasons, such as large operators with multiple parks wanting to centralise their systems as well as small satellite locations wanting simple and effective access to central systems without any complication.” Breeden added that, similarly, other organisations have the same reasons for wanting to shift to this model.

Scaremongering
What are the on-premise model’s strongest lines of defence against the alternative SaaS deployment? According to Breeden, the on-premise model is slowly losing its footing in the market. “Where it still performs well is in a single location environment with predominantly office based staff,” he said. “The minute you have multiple locations and satellite workers, the SaaS model starts to be much more attractive and appropriate. The strongest line of defence of on-premise environments is mostly the ‘untrue’ argument of security: customers think they have a secure environment if they put the servers on-premise, but this is not a true argument but is often used a lot (people think that IT is safe if they can ‘see’ the servers).” Hughes’ view is that the strongest line of defence is a user organisation’s level of control over its own network, as compared with the need to rely on external networks when working with SaaS. Clark, on the other hand, makes the point that there is always a market for different deployment methods across the myriad business requirements. “Therefore to talk of a ‘defence’ suggests an ‘attack’ of some form and this is difficult to understand,” he said. “That said, some vendors will always resort to scaremongering and this has always been the case for any new development, because it’s easier to deny than develop.”

And what are the current talking points related to the ‘mix-and-match’, or ‘hybrid’, adoption model? Breeden considers that most deployments will usually have some form of hybrid format as in the most basic form you still need to print to a local device. However, he adds that in some instances organisations still require some local integration as they may for example have a weighbridge or some document scanning that needs to feed data back into the Cloud. “This is precisely why it is essential to conduct an audit and technical review of your application and device landscape in conjunction with third-party suppliers en route to your ‘Cloud’ implementation,” he said. Pesti makes the point that most companies rely on a mix and match of systems, third-party service providers and manual processes. “Very, very few systems, or none of them, support the whole supply chain process,” he said. “However as logistical processes are getting less complex, the average number of systems and platforms which companies use has dropped in recent years.” Hughes considers that the mix-and-match model will actually support the acceptance of SaaS, and points out that Ortec’s software can be easily integrated with other software applications. However, Hughes adds a word of advice: “Try to select close partners and make sure that it is clear which company is responsible for what.” Clark reflects that, as a specialist in SaaS Software development, Snapfulfil has not seen any solutions that specifically benefitted from on-premise deployment. “What should really concern software purchasers is the recent rise in hybrid offerings of on-premise software, simply funded in a different way,” he said. “This ‘hybrid’ doesn’t allow the client to realise the real benefits of SaaS deployment, both technically and operationally.”

Are there any remaining issues related to the Cloud infrastructure itself to consider? Clark considers that the supporting platform and communications will often depend on a variety of business drivers, but with the right application and network security, from a professional provider, combined with sensible password precautions, the public internet is as secure as most companies will ever need. Hughes comments that, in terms of Cloud infrastructure, Ortec advises organisations and companies to first consider the following:

• Deal with data: don’t assume everything should ‘go online’. Decide what information should be held internally and what can safely be placed in the Cloud.
• Allow access: adoption of the Cloud doesn’t have to include everyone. Organisations should identify which departments, individuals and associated information are best suited to Cloud platforms and decide accordingly. Without a considered approach, they risk unauthorised access to their data.
• Rules and regulations: ownership of data is a critical issue and businesses need to keep on top of where it is located for their own confidentiality requirements and external data protection issues, and to ensure compliance.

No protocol
According to Hughes the Cloud infrastructure shouldn’t really be a problem. “Provided that a company first analyses how the Cloud can improve its business efficiency and support innovation, and then decides on access, data and rules and regulations, Cloud computing should serve that company well,” he said, adding: “Deal with these issues, rather than backing away.” Breeden remarks that every implementation is different and has different and diverse elements that need consideration and integration. “Each of the previously mentioned models has its merits,” he said, “but a final decision on what model you should adopt is down to your strategy and requirements.” Breeden added that a huge issue unavailable from the Cloud Infrastructure today is the omission of a standard integration protocol. “Currently there is no standard way of integration between the Cloud providers,” he commented. “My opinion is that this will be available in the near future, but is still missing. Where there is XML for application integration, there is no protocol for Cloud integration.”

What are some of the main functionality differentiators among the platform vendor community? Breeden considers that each has its individual merits and all of these are either a first step into the Cloud or a whole cultural shift from the traditional working models. “All Cloud-players create their own standard and focus on the same functionality – they are in general doing the same Cloud proposition and do not have USPs per vendor, the USPs are now general,” he said. Hughes remarks that Ortec is proud to be one of the functionality differentiators in the field of Advanced Planning Systems (APS). “We have no preference for any particular platform vendor (such as Amazon, Microsoft and so on),” he said. “The SaaS services most commonly used within our organisation are Eloqua, Leadlander and Google.”

Cloud movement
What are some of the key areas of continuing SaaS/Cloud development to look out in the near future? Breeden believes that integration and hybrid models will become more flexible as Cloud-based services strive to achieve greater flexibility. “This will lead to a greater use of technology,” he said, “meaning that the traditional desktop will be brought to your various devices; such as smart phones and tablets. Device specific applications and services will slowly disappear as business applications become non-device specific. The integration must not only be at ‘authentication’ level, so functionality from different vendors can be integrated at a higher level but also datacentre integration (private and public work together) and applications must be developed for all devices.” Clark reflects that, as with many mature technologies, the improvements are unlikely to be “earth shattering”. “…but we will see many other vendors launching SaaS or Cloud version of their software, as they notice more and more of the market is moving towards SaaS solutions for their software needs,” he said. Pesti foresees more horizontal collaboration, while Hughes considers that because SaaS is becoming more popular every day even software giants are testing out the model with specific individuals. “Within a few years we may well be writing documents or handling spreadsheets online rather than opening a program on our computer,” he remarked. “In fact, for many companies and organisations, this is already daily routine.”

SaaS evangelist Demian Entrekin, founder and CTO of Innotas, makes the following points:

1. User networks
“Applications will become less and less restricted to a particular organisation and more oriented around user networks. This has the effect of making the applications more user-centric rather than organisation-centric. Paradoxically, this is good for the organisation, since it will lead to better adoption.”

2. Product sells itself
“Due to the emphasis of ‘Try It, Buy It’ approaches to marketing SaaS, product management and product marketing teams will be forced to push more of the ‘whole product’ and ‘solution selling’ concept back into the product itself. The product needs to incorporate business processes into the product features.2

3. Sense of value in three minutes
“SaaS applications have only a few minutes to make an impression. I like to focus on the first three minutes. If you can create a sense of value in three minutes, you're off to a great start. That said, you'd be well advised to also focus on the first three years if you want to survive beyond three days.”

4. A reliable, scalable and low-cost service
“COGS (cost of goods sold) and gross margins are financial metrics that should drive the technology strategy; as W. Edwards Deming might have predicted, the ability to support a reliable, scalable and low-cost service is becoming an ever more important advantage.”

5. Less consultancy
“Now that there is less and less room for fancy, high-priced consultants to answer the fancy, high-priced questions, Tier 1 support will take on a bigger and bigger responsibility to represent the company and answer tough questions. Will a good FAQ cut it? I doubt it.”

6. Improved integration partnerships: One vendor, more solutions combined in one
“SaaS vendors will dedicate more resources to integration partnerships with other SaaS vendors. Right now, they talk about it but they don't do it very well. This may be the best answer for the elusive ‘channel’ for SaaS vendors. SaaS doesn't have enough substance for the traditional channels.”

7. Video for training: demos, webinars
“SaaS products will begin to use more and more video for training, support, documentation and so on. It's cheap and easy and more interesting to watch. Text-based tools are being replaced by A/V.”

8. Outsourcing
“SaaS companies will start outsourcing more and more parts of their own operations. This is important because they can get the same kind of leverage from full-service hosting providers that they provide to their customers. These kinds of arrangements will also lead to natural SaaS aggregations of applications into end-to-end partnerships.”

9. More cloud compatible solutions available
“Utility computing remains an open question and will be driven by the cost of providing the service. In some cases, you may be able to get your monthly operating costs per user down to a low-enough price that grid computing won't offer enough of a benefit. In other cases, it might provide just the kind of cost advantage that makes it worth the effort. In either case, SaaS vendors should build applications that are ‘Cloud compatible’, so that they can take advantage of grid computing when it makes good risk/reward sense.”

Same premise
Clark concludes with the observation that only 15 or so years ago, people were unsure if they should go to Windows, Unix or AS400 platforms when they purchased software. “All of the platforms had their pros and cons and everybody had their preference,” he said. “The main point that everyone agreed on, was ‘buy the software that is written for the platform’. The platforms have changed, but the premise remains the same – to fully appreciate the benefits of SaaS solutions, the software must be developed utilising the latest web technologies or you may not like the compromise.”