Changing to a Saas model

For almost 20 years Sterland Computing has been selling business management software to building supply companies.

Over the past three years this market segment has become relatively saturated with solutions and although Sterland Computing is still offering a compelling reason to buy, growth around this segment is limited.

As a result, Sterland decided to address the small building supplies customer –the single site operation. This market segment is highly price conscience, with limited knowledge and interest in IT, therefore a traditional software model seemed a mismatch.

Currently smaller building supply companies that wish to step up from generic business software such as MYOB do not even consider products as powerful as Sterland Computing’s Prostix as it stands. They are under the impression that they are too small and the Prostix product is overkill in both price and complexity.

As a consequence this enables competitive products the opportunity to gain a new client virtually unchallenged. Unless the customer is of a certain size or has suitable vision, Prostix is not considered.

The concept of software as a service (Saas) began to take hold. What is software as a service? According to leading industry analysts and active service providers alike, software-powered business solutions that are delivered as a service all share several common characteristics.

These include:

A focus on process automation rather than technical implementation and custom coding.

Provision of application accessibility – in the majority of cases, Saas providers do not sell the rights to the application outright; instead, Saas providers provide access to software-automated processes as a service offering.

Central management of services – the SaaS applications are hosted, managed and maintained in a centralised data centre, enabling a reduction in overall support and maintenance costs.

Offering a one-to-many service – in order to accomplish the “economies of scale” associated with SaaS, the providers develop a multi-tenant application that supports multiple end users accessing a single source of the application business logic and database.

Guaranteed performance and reliability via service level agreements.

Internally by adapting an already existing system rather than building it from scratch, Sterland had the advantage of quickly being able to provide an already proven solution to the marketplace without the time consuming and costly exercise of building up to a successful product by way of market feedback and the subsequent release of
progressive versions.

So the strategy was mapped out. All that remained was to convince the board of the merits to invest into a business model that offered a lengthy return period into a market in which Sterland had traditionally seen limited success.

We adopted an approach to offer SaaS as a supplementary offering to the segment rather than as a replacement strategy, that way reducing the risk of eroding our current markets.

There is a bumpy road ahead for those looking at SaaS but with focused strategy and commitment the benefits can be substantial and complement well a traditional software application model.

Greg Thomas is general manager of Sterland Computing.

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