Saas vs Bahu

For most Indians, the relationship between the saas (mother-in-law) and the
bahu (daughter-in-law) is not just a traditional one, but also a love-hate
delicate dance of destiny, much like the Chinese yin and yang.

Traditionally, every saas was once a bahu. Electronically, every company
thats currently a Bahu (or one which Buys All Hardware and Utilities or
software) cannot become a SaaS (or one which uses Software as a Service).
Traditionally, every company starts off as a Bahuit buys all the computer and
networking hardware, operating systems, software applications, security programs
and storage solutions. It owns all the hardware and the software that runs on
its servers, desktops and mobile devices across the company.

But this is an expensive game because software applications are becoming
complex and costly. And as the company expands, every additional staff member is
an additional seat and is charged for an operating system, an ERP or CRM
application, a security patch, and a VPN connection.

Across the Asia Pacific, ICT (IT and telecom) costs now constitute between
20-25% of annual capital expenditure among SMBs. Small businesses typically
spend a larger portion of their capex on ICT, compared to medium businesses. And
about 20-25% of SMB IT budgets go to pay for software, security, storage and
networking. That kind of money might be difficult for an SMB to spend as a
Bahu during such lean and mean times.

Take India, the country has about 4mn SMBs. These will invest $770 mn on
buying packaged software in 2008, up 20% over 2007. According to AMI Partners,
spending on databases, accounting, networking, productivity and systems software
will account for more than 90% of the total software spend. SBs will see a 23%
rise in software spend, while MBs will spend 28% more on software this year.

The top apps that these Indian SMB Bahus will buy are solutions for
productivity enhancements, accounts and financial apps. Other areas include
investments on back-end and front end operations, marketing, sales and analytics
tools, and CRM and ERP software. Much of this can be pushed to a SaaS model.

Raju Chellam

SaaS is software thats delivered as a service. Much like electricity comes
to your home or office. You flip a switch, the power comes on; you pay for what
you use. The same with software. You pull up an app from a data center in India
or outside and pay for the time or period or service you use. You dont own the
software.

Is SaaS picking up anywhere else? In Singapore, some SMBs are waking up to
the potential savings if they use SaaS. Currently, spending on hosted apps and
SaaS forms only 3% of all software spending among SMBs in Singapore. However,
SaaS spend is set to grow 30% a year between now and 2010, the fastest in South
East Asia.Overall, SMBs in Singapore will spend $140 mn on software this year,
up some 10% over last year.

As for the US, currently 21% of SBs and 31% of MBs use SaaS. Thats up 50%
over 2007. According to AMIs latest study, MBs in the US spend six times more
than SBs on SaaS.

The interest in SaaS is fuelled by offerings from vendors such as Microsoft,
Google, Salesforce.com, Amazon.com, and SAP. Also coming soon are offerings from
Tata Consultancy Services, NetBooks, Longjump and Coghead, among others. In
Singapore, SingTel is the 800 pound gorilla that has announced a comprehensive
SaaS offering to SMBs and large businesses right away.

The going is getting tougher, with a global recession, a severe credit
crunch, and rising cost and complexity of deploying IT across the distributed
enterprise. What can you do? As a first step, it might be a good idea to not let
this opportunity pass, and to step back and think, whether you will remain a
Bahu or will consider SaaS.