Solutions-as-a-Service and the Small and Midsize Business – Has Its Time Come?
By: Steve Ernst
Background
Software as a Service (SaaS) has been around for years in one form or another. Just a few years ago I was making a presentation to a group of CPA's in St. Louis and in the discussion afterwards the then fairly young thought of SaaS came up and I asked the group, most of whom had public practices and focused on the small and midsize clientele, if their clients were considering SaaS and if they would recommend they do so. Almost unanimously, the answers were no and no. The first question was "isn't SaaS the same thing as ASP. This was at least 4 years ago and the question was understandable. I described SaaS as a service as being more of a technology or platform where an ASP was a mere server-based of a desktop application. The ensuing conversation centered on concerns about the stability of the software vendors and hosting companies then involved in the industry both as publisher of the software and the host of the application and data, the methods of entering and storing data, and the safety of the data when stored "outside" the clients control. The most significant concern was that of vendor stability and availability. In any case, the CPA's present at that meeting were individually and collectively skeptical and apprehensive about their clients moving to a SaaS environment and they were not ready to recommend that technology to clients.
If any guiding principle within accounting can be used as a descriptive for the profession as a whole, I would point to "consistency." I don't like painting groups with a broad brush but we CPA's do look upon consistent decisions, consistent disclosure, consistent action and consistent execution as a basis for everyday practice and the starting point in most of the things we do professionally. As a CPA, I think we look upon technology from the same perspective as we do our or our clients financial statements, when you've made a good decision on the appropriate classification, accounting treatment, measurement and disclosure, stick to it consistently. We have done the same thing with technology.
Natural Progression
As with accounting and reporting decisions, circumstances change, the character of a transaction change and the client's business changes to the extent that either additional or different accounting conventions are required or reporting requirements raised. I've seen that over the last few years when it comes to the CPA communities view of SaaS as it applies to or could apply to their ongoing business if they're sitting there as an owner or key decision-making executive or if they are advising and serving that company as a client.
More recently, the questions raised by CPA's when SaaS is discussed are focused more on the type of applications that are available, the emergence of stronger, more stable and dependable vendors of the software and the hosting services and less on the security of data as the internet and web are being viewed as controllable and data-protection enabled with the right processes and controls.
With the vertical markets of technology, financial services, utilities and the media leading the adoption of SaaS and the CRM function being joined by applications offering HR, SCM, Finance and Financials, Compliance, and Collaboration capabilities, CPA's today can't afford not to pay attention to the trending technology as an option to be reviewed and discussed for their companies or those of their clients.
The Path Forward
Just as in the ERP world where on-site, server-based, fully-integrated ERP solutions have been developed for small and midsize companies and their budgets, the same is happening and happening rapidly in the world of SaaS with broad, integrated solutions now available for the growing company whose collective and concerted energies are aimed at product development, market penetration, profitable revenue growth, funding sources and bringing on board the necessary management talent to support and guide those efforts. Rapid growth and a changing financial market leave little room for in-depth technology discussions and very little room in the budget for an IT staff or infrastructure. All of these elements point toward SaaS as a solution for the small and growing business.
"Solutions-as-a-Service"
If the technology of SaaS is robust and fully-integrated and supplied and hosted by a strong, dependable and secure provider, then SaaS means more than just software-as-a-service to a small or midsize growing business. In that form SaaS means "Solutions-as-a-Service" and that term conveys and infers the idea of scalability and scalability at the same pace that a growing business needs. In addition to that almost instantaneous scalability solutions-as-a-service offers minimal start-up incremental costs, IT operating costs that can be predicted and visibility of key financial and operational data throughout an organization that might be small but with multiple locations some of which might be offshore. "Solutions-as-a-Service's" time certainly has come.
Steve Ernst, CPA, leads the SAP CPA Advisor and other influencer programs for SAP America, Inc. Prior to joining SAP, Steve provided consulting services to boards and executive staff on accounting, auditing, business processes, and internal control systems, as well as sales, marketing, and business development initiatives. He has more than 30 years of experience, including 10 years with PricewaterhouseCoopers LLP and more than 20 years in international finance and operations in the consumer product and technology markets. You can contact him at steve.ernst@sap.com.
Return to newsletter
