SaaS : Canthe Clouds Host Some Green Drops?

What happens when a business user is offered a new scenario of using ERPs,
software and applications? SaaS versus the subscription model? A model which
lets users move away from the hassles of ownership, management and traditional
full-time license and upgrade costs that existed in a subscription model, by
allowing them to move to a pay-per-use rental model delivered through the Web?

Well, not much is left to guessing.

Back-of-the-envelope calculations become attractive as one figures out lower
TCOs for applications, scalability without new infrastructure costs, risk
reduction on new acquisitions in case of SaaS in contrast to high capital
expenditure, direct and indirect investments, ballooning costs with long
implementation time, that has to be lived with in case of conventional software
models.

SaaS on the contrary has no capital expenditure, no investments and is touted
as a low-subscription model with implementation done in weeks. But are there any
other by-products of going for a SaaS model besides the usual considerations?

When the customer does not take ownership of the software, but instead rents
a total solution that is delivered remotely, it surely brings down the erstwhile
hardware, server infrastructure and people costs, even if in just a relative
sense. If the application provider is taking up the responsibility for the
deployment, operation, and maintenance of the IT infrastructure, there is high
probability of the scope of reducing power consumption and consequent carbon
footprints.

It is hence not a surprise that vendors of SaaS model are not only talking
about financial ratios but also the green rationale as the new pitch.

Pitching the Green Tents

How do you go green when you go SaaS? The first obvious answer is on reduced
maintenance.

SaaS is very relevant from the green perspective because the biggest thing in
traditional ERP models is maintenance. As Ganesh Subramanian, head, sales,
OnDemand ERP, Ramco Systems puts it, the client server might not be green as you
are stuck with some vision. Every year you need to be adapting and working the
AMCs, the patches, the documentation etc. But green comes along if all that is
always available on a latest platform through a plug-n-play model.

With SaaS, which can be accessible from anywhere via the Internet, there is
apparently no need of expanding scarce in-house resources on further updates and
patches. Traditional ERP biggies ranging from Oracle to Microsoft are now
underlining SaaS in a big way, with stuff like hybrids and SaaS versions of the
bloated applications turning a natural member of the new Menu cards.

Imagine a restaurant switching to e-bill that comes straight to your phone
instead of printing a paper-bill out, asks Shashank Dixit, CEO, Krawler
Networks, the $10 mn ERP start-up, that has in its portfolio CRM and ERM
offerings built around search analytics on-demand/SaaS as its basic model.

He reasons, Assuming tens of thousands of people eat at any such restaurant,
it would mean saving millions of sheets of paper, thereby saving trees, saving
energy that goes into producing paper and so on. A good ERP implementation
reduces paperwork tremendously. Krawler is working with Greenbills in Singapore,
which is bringing the invoicing and billing to mobiles and desktops. We have an
Energy Module in our ERP that can estimate the cost of energy per dollar earned.

Another ERP player MAIA Intelligence with about two and half years of
existence has sought its niche in the BI market, and doesnt miss the
opportunity to label SaaS and Cloud Computing as green. The argument springs
from reduced data center investments, chance for employees to reduce their time
commuting, and thus reduced carbon footprint.

No doubt, SaaS and cloud computing or desktop-as-a-service become potent
carbon-reduction tools when offered through large-scale operations. asserts CEO
Sanjay Mehta.

Well Nailed?

Cloud computing, that Gartner defines as a style of computing in which
massively scalable IT-related capabilities are provided as a service using
Internet technologies to multiple external customers, is gaining ground
steadily.

Incidentally, as per a Gartner study in December 2008, 90% of organizations
surveyed expect to maintain or grow their usage of software SaaS, while more
than one-third of respondents indicated plans to transition from on-premises to
SaaS. The main reasons cited were cost-effectiveness and ease/speed of
deployment. In fact the survey indicated that more than 40% of organizations
have used SaaS for more than three years, implying a growing fluency with the
model within the end-user base. In terms of transitioning from a current
on-premises solution to a SaaS indicated a 70% conversion. But talk about the
green argument, and the proverbial pinch of salt surfaces.

For Nareshchandra Singh, principal research analyst, Gartner the green
connotation is realistic only for large set-ups as enterprises with economies of
scale only can reap the green crop.

He admits the obvious green virtues like less space utilization, less
infrastructure on IT and power, etc. Technology is definitely helping but we
are still a little far off from proving the green cost returns of SaaS.

The benefit of efficient use of product remains, more so when the
shareability issue is addressed when the product is centralized with SaaS, thus
improving the efficiency, he says. The IT equipment is also taken care of but
the green view is more relevant when the external SaaS model is used and not
when an internal one is used.

There are two aspects of SaaS. Internal is where the companys internal IT
department becomes a service provider for the whole organization from a
centralized location allowing remote users access from anywhere. If you go for
external model, instead of buying your own product and deploying it, you take
the service from an external provider with a per-use-charge. This is even better
from both cost optimization and green perspective because you share the same
infrastructure with multiple users.

A Contrarian View

A candid account from Arvind Joshi, CIO, MphasiS, an EDS company shows that
SaaS still has a long road to cover on practical experience and the green
terrain.

I dont see any technology leader adopting SaaS for green pursuits.
Financial reasons are still the key driver rather than the green cause, asserts
Joshi who has his doubts on the new-fangled SaaS buzz. SaaS fundamentally has
kicked off much before, during the Dotcom era. We shied away from it then and
are now repackaging it as SaaS, while the same has been around for quite a
while.

He reckons Salesforce.com as a classic example that has matured with time and
gives an entire hosted scenario. Green surely is helped when precious power
is consolidated instead of distributing it along with hardware efficiency
maximization. SaaS is definitely green but more so for the vendor as it paints
the wall for him green overall, when we think of his servers, hardware,
efficiency ratios and centralized models.

Will it Deliver?

It might be too early to judge SaaS from a green prism but only time and
future numbers on carbon scores and balance sheets of users can substantiate the
confidence doing the rounds right now.

As MAIAs Mehta stresses confidently, companies are finding that going green
isnt just good for the environment, its good for business as well.
Sustainable green practices can be a huge selling point to both partners and
customers. By gaining a hold in this market while it is still relatively new,
companies can start establishing themselves as green even before it becomes the
norm.

Seems at least its worth the test.

Pratima Harigunani

maildqindia@cybermedia.co.in