Understanding a True SaaS: What You Don’t Know Can Cost You

Disruptive innovation was the central theme at last month’s 2014 EuroFinance international cash and treasury management conference in Budapest, Hungary. Conference organisers challenged attendees to assess their own ‘techcentricity’. What this challenge was really about is embracing change – and those who embrace change receive the benefits.

When it comes to treasury technology, it is the SaaS model that supports change. The proof is that now most treasury technology providers are working hard towards introducing SaaS offerings. Even enterprise resource planning (ERP) solutions, after years of being welded into corporate technology infrastructures, are recognising that cloud-based SaaS offerings are the preferred technology going forward for both IT departments and corporates.

But ‘cloud’ is not enough to understand what a true SaaS really is. What some are calling SaaS applications are really application service provider (ASP) applications or a mix of old installed applications with new front-ends.

Community defines a true SaaS

Technology has progressed from mainframes, to personal computers, to installed client/server systems, and now to the cloud. SaaS is the way to deliver software in the cloud. A true SaaS solution is a single-version, multi-tenant application that hosts a community of users on a common platform. Community is the fundamental feature of a true SaaS because all of the application’s users benefit from working on a common technology platform.

These benefits are felt inside every company and across all users. It allows economies of scale for both the provider and, therefore, the user community. No one company has to wait for an upgrade because all users are kept current on the same version of the application, at the same time. In addition, a true SaaS community can extend beyond users to integrate connectivity seamlessly into third party solutions, enhancing an all-in-one treasury workflow.

Treasury professionals want to know that the software they are working on represents the best practices of the industry. With a SaaS solution, it is the work of its community of users that continually feeds the ongoing development of the solution and the richness of its functionality over time. This, in turn, allows companies to standardize their workflow across the global treasury organisation, across functions, geographies and time zones.

Ironically, it is the standardisation that a true SaaS solution provides that is often misunderstood, keeping companies tied to old technology and old ideas of customisation.

Standardisation is not about rigidity, it is about configurability

There are many ways an organisation is structured, depending on its industry, its size, its regions, and whether it is centralised or decentralised. A SaaS solution enables companies to standardise workflow across the enterprise, while enabling them to configure a set of parameters to meet their own unique needs.

Getting the entire enterprise on a common platform is necessary for global visibility into positions and exposures, setting controls, and assimilating new business entities into the organisation. Companies really don’t want to customise themselves into an island that, given time or a change in leadership, would leave even a support team unable to figure out their version. This approach is not scalable and not sustainable.

As companies begin to grow out of their old technology, they will want to adopt SaaS solutions. SaaS remains the most popular form of cloud service and adoption has more than quintupled to 74% in 2014 from 13% in 2011, according to North Bridge Venture Partners´ 2014 Future of Cloud Survey. But as companies begin to evaluate SaaS offerings in treasury, they should make sure they can identify a true SaaS in the mix.

How Mistaking ASP for SaaS Can Cost You

You cannot simply substitute ASP for SaaS, or think that they mean the same thing. Be aware of what a SaaS should look like. Below is a chart to demonstrate how a SaaS offering should satisfy your needs:

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