Issue 257 - Small Businesses Finally Have the Advantage

When a David goes up against a Goliath 99 percent of the time the Goliath wins. If you're a David and you want to win you need to be smart, fast, and have a secret weapon (If you're a Goliath you need to watch for smart fast Davids and keep an eye on their weaponry.) As reported by Julia King one weapon that's entering the mainstream for all the Davids out there is SaaS.

Davids: Arm yourself.

Goliaths: Take note.

Business are turning to Saas for Applications Ranging from CRM to ERP

According to Julia King of Computerworld "Businesses are taking the plunge into budget-friendly software-as-a-service (SaaS) offerings for everything from recruitment to central ERP." She continues to say that "Relatively low start-up and implementation costs are no doubt driving SaaS adoption...Just as important is that they typically get greater software functionality and more upgrades from SaaS vendors than they could ever manage with on-premises applications"

That's cool, but let's get back to how David can overcome Goliath using SaaS. First let's set the battlefield. We'll say David is a small company with 4 employees, we'll say Goliath is a larger company with 20 and they both sell provisions in the same area. David and Goliath are both having similar trouble with catch-weight inventory management.

Before SaaS: David and Goliath would both be looking at a sizable capital investment. Goliath's expenditure would have a higher total value, but Goliath will be able to spread out the cost of equipment like servers over the larger number of employees, giving him a lower cost per user. With all else being equal, with traditional solutions Goliath would see his return on investment sooner.
With SaaS: David and Goliath are looking at little or no capital expenditure and low start-up and implementation costs. Goliath's size does not provide an advantage and the battlefield is level. In fact if David is smart and quick he can come up to speed faster on his system (he only has to train 4 people, not 20). With no capital expenditure to work off a SaaS solution enables David to earn his return on investment quicker than Goliath, winning the battle.

So why isn't everyone using SaaS? "It's the control issue." says Ginnie Stouffer, vice president of consulting at IDC Partners. "They're much more comfortable if they can control the application."

Dan Lohrmann obsevers "Every customer says they're unique. Every customer is special, but they're not really that unique...If someone said you could do X, Y and Z for half the price with SaaS but you'd need to change...I think you'd all of a sudden see those unique requirements would not be as important."

That's a bitter pill to swallow for many Goliath companies who are heavily invested in "unique" solutions and support full IT departments or who have established processes that will be difficult and costly to change. In the meantime for the David companies who are flexible, smart and quick can take advantage of the Instant Return On Investment (IROI) offered by SaaS based applications.

The "trouble" of course is that eventually the SaaS applications will mature to the point where Goliath can use them as easily as David can. "Good-quality SaaS companies are constantly growing their environments," says Doug Menefe, CIO at Schumacher Group. Referring to the company he works with he reports "They do quarterly releases, so I get new features and functionality every three months."

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