By Ted Howard
Software-as-a-service offerings are getting more robust as the focus turns to improving service.
As software-as-a-service products continue their inexorable march to replacing the old-fashioned licensed on-premise applications, many vendors are putting the emphasis on “service” by trying to offer more.
By bolstering current software as a service (SaaS) offerings, they’re looking to deliver more functionality aimed at better straight-through processing (STP) and building better workflows for corporate treasury. As Justin Brimfield, SVP of Corporate Development at Reval put it, “We want to take as much of the headache as we can away from the client and really focus on that second ‘S’ in software as a service.”
New and Old Together
One of the principles from the recent World-Class Cash Management Project conducted by The NeuGroup’s Global Cash and Banking Group in partnership with Citi Diagnostics (see “World-Class Principles Come to Cash Management,” IT, January 2011) was that a global single instance of a treasury workstation and ERP be the end game. That’s because a SaaS solution on the TMS side can be a useful short-cut or interim solution. And this is what vendors like SunGard and Reval have been working on.
Still, putting that emphasis on that second “S” sometimes means having the flexibility to revert back to what for some companies is a more familiar or comfortable approach—licensing the software and keeping it in-house. This has been learned at SunGard, where one of their mantras is to never let a client’s initial investment go obsolete.
According to Scott Coffing, president of SunGard’s AvantGard, the company still finds that for many customers old habits die hard. Some people are “happy to share a single instance of an application with a bunch of people where there’s one release of the software and everybody gets upgraded at the same time,” he said. But, he added, there remain clients that “like the traditional model of, ‘You’ve got a software application, let me buy it and I’ll manage all the IT myself,’ that is probably still a third of our business.”
But AvantGard has also hit upon a third and partly “middle” way. The company has developed a model where companies license the software but AvantGard hosts it for them. Mr. Coffing describes it as a “middle ground” offering, for which AvantGard has seen a lot of demand. That’s because IT policies tend to change or the company has changed IT vendors, in which case that vendor might want more control of the process. Companies also just like the ability to control the license and do what they want in terms of where the application is located, Mr. Coffing said.
Generally speaking there are a number of SaaS combinations that companies can choose from, allowing for whatever control and flexibility is called for:
1. Shared application plus shared hosting – vendor hosted.
2. Shared application plus dedicated server – vendor hosted.
3. Shared application plus company-managed server – vendor data center.
4. Shared application plus company managed server – company data center.
5. Company controlled version of application via options 2, 3, and 4.
Efficiency, Visibility still Key
While “best-of-breed” applications can still be mixed in as necessary, the overall trend still is to minimize their number, say, to a single global instance, in order to improve STP, data integration and visibility.
The other part of this equation is the goal of reducing the number of applications and systems supported. This last item is important in the context of the IT support treasury gets to implement, integrate and maintain diverse applications from numerous vendors: there’s a lot of competition for resources.
It is therefore important for vendors to continue to up the service part of their offerings and provide comprehensive support for their applications, including integration, maintenance and upgrades assistance.
The integration challenge is perhaps the most critical, since world-class treasuries are striving for efficiency with ever-higher levels of STP and data sharing to populate analytics that benefit cash forecasting and risk visibility. The best SaaS solutions must therefore fit seamlessly into treasury process automation efforts—in addition to addressing the problem of inadequate IT support.
But that perfect nexus between treasury and SaaS is almost a Utopia not soon achieved. As AvantGard’s Mr. Coffing pointed out, treasury services like a single app on an iPad don’t exist, precisely because of those data and bank connections. Further, it “isn’t really applicable if you think about secure, financially based applications for corporations.”
“You’re not going to buy a treasury management system on your iPad app that you pay $15 to click and download; it doesn’t exist,” Mr. Coffing said. “TMSs need to be connected with all the other internal systems and your banks.”
Benefits Outweigh
Still, the On Demand or SaaS model does offer significant benefits for companies looking to minimize operating costs, increase competitiveness and focus on core competencies. The key advantages of using an On Demand solution are lower upfront costs, a faster ROI, predictable ongoing expenses, ease of installation, automatic service upgrades, and reduced IT resource requirements.
And companies want it more than ever. Reval’s Justin Brimfield says some clients have told him that the key requirement in their RFPs is the ability to offer SaaS. Whereas SaaS used to be a novelty or a “cute to have,” it’s now a must have. “It’s amazing how far the pendulum has swung. It’s now a mandate,” Mr. Brimfield said. Decisions are being made based on whether SaaS is offered, he said.
For companies targeting IT as a place to cut, SaaS does offer some irresistible attributes. “If we say, ‘We’re going to handle all your connectivity, handle all your software, your hardware and your upgrades and here’s one phone number to call if there’s a problem,’” Mr. Brimfield said, alluding to the Reval approach. “You’re not going to find many business people who are going to turn that down.”
As long as it works
Ultimately, what many vendors are learning is that treasurers aren’t as interested in the technology as they are in a service that they know they can rely on. “We’re moving to a world where people that consume software are going to assume that the people who created it are also going to take care of the IT,” AvantGard’s Mr. Coffing said.
In that world, treasury just wants access to the application, they want it to work, they want it secure and they want it up and running quickly. And the way technology is advancing these days, SaaS and other “as a service” products will fulfill those wants.