In researching software choices for her Web-based business, Mary Maesano made an early discovery: She was no software engineer.
Yet the founder of In Casa Gifts – an online boutique that sells occasional favours, gifts and accessories for things like weddings or baptisms – not only needed e-mail, accounting and customer relationship management (CRM) software for her virtual business, she also wanted to make sure she maintained control over key platforms.
Her solution was to rent, not buy, the software from NetSuite Inc., a key player in the market for small and medium-sized business software-as-a-service – otherwise known as SaaS.
“We did a lot of comparison shopping with the software programs and we knew we needed the right tool from the start,” Ms. Maesano said. “With SaaS you don't have to worry about the support. Even if there are errors or bugs, they support you and you're always getting the updated version.”
SaaS applications run the gamut from Web design to enterprise resource planning platforms, including e-mail, analytics and social networking. Their advantage is that they offer all the power of programs used by large enterprise players but at a fraction of the cost because the monthly fee is scaled to what a business uses.
And interest is driving the widespread adoption of Web-based software.
The market for SaaS topped $5.1-billion (U.S.) in 2007 and will hit $11.5-billion by 2011, reports research firm Gartner Inc. By then, SaaS is expected to comprise about a quarter of all corporate software sold.
It's that kind of growth that prompted Microsoft Corp. to jump into the market. This week the software giant announced the launch of Office Live, a suite of software that's available by subscription.
The market darlings in the SaaS space are NetSuite, which provides a soup-to-nuts set of applications for small and medium-sized firms such as accounting, payroll and marketing software, and Salesforce.com, which offers CRM to more than one million users in nearly 40,000 companies.
NetSuite is based in San Mateo, Calif., with offices worldwide including Mississauga, and sells its software to companies with as few as 10 users.
The concept of leasing software was first popularized in the 1990s but collapsed under issues of competition, pricing and the reluctance of large companies to trust their mission-critical data and applications to an offsite partner. And despite its recent growth, companies such as NetSuite have never turned a profit.
However, things are changing and as SaaS gains more traction, companies like CopperKey Inc. will find the going easier.
CopperKey's software takes a corporation's customer data and then analyzes it against third-party databases to identify similar key market segments to better target customers, explains Peter Vanderlee, executive vice-president with CopperKey. “It's disruptive in that before CopperKey you'd have to go through the [data crunchers] and there aren't very many of them out there and in four to six weeks and for between $6,000 and $12,000 they would identify segments for you,” Mr. Vanderlee says. “We can do it in a few minutes and $500.”
Nathan Rudyk of Market2world Communications, a six-person boutique operation in Ottawa, say about a third of the software the company uses now is SaaS – double what it was three years ago.
“On Dabble [dabbledb.com], for example, we have 300,000 media contacts we track and it saves us the hassle of storage,” Mr. Rudyk says. “In my last business we built a website that cost clients $30,000, $40,000. Today we tell them they can do it themselves for about $15 a month,” at sites such as squarespace.com.
Small companies and startups just don't have the resources in house, nor can they afford to outsource too much, he says, and the solution is usually SaaS. “We can run a launch campaign for a client and then when it's over, stop the subscription or if they want to keep it going, keep paying,” Mr. Rudyk says.
Like many small businesses, Canadian Model Trains (modeltrains.com) reached a fork in the road a couple of years ago after more than a decade of growth. It had been serving an international clientele since abandoning its Oakville, Ont., bricks-and-mortar store to go wholly online but its business support systems had hit the wall.
“We had our accounting on QuickBooks, our customer relation management on a DOS-based program as a mailer and our website on Front Page,” says Tom Tomblin, president of the company. “Every time we updated a customer it meant two or three separate entries.”
Mr. Tomblin – who has a background in banking and accounting – opted for NetSuite because he liked the ability to search the customer database, create targeted segments and measure response. “We only e-mail our customers with information they are interested in and we can get up to a 20-per-cent response,” he said.
With the success of the CRM module, Mr. Tomblin started installing the enterprise resource planning module in January and is working to integrate the Web content management module to move their website over.
The advantage to the firm is not just having their system integrated but also in having their IT needs packaged and reduced to a fixed monthly cost.
“They host everything and the system is pretty well bulletproof as far as I can see,” says Mr. Tomblin, who has five full-time staff and some part-time salespeople. “We've already had some phased-in upgrades with zero problems. We're pushing the envelope a bit with what we're doing but the tech support has been very good.”
Special to The Globe and Mail
7
