Have you jumped into the deep end of SaaS yet? Maybe you’re saying, I’m in up to my ankles now, that’s far enough, I’ll get the agility benefits we talked about last time and call it a day. Well, the same research that identified links between SaaS diffusion and agility, also identified a relationship between SaaS diffusion and the improvement of firm capabilities, like organizational learning and focusing on your core competencies. Get your wetsuit ready, you’re going to want to jump in headfirst!
Learn from Your SaaS Deployment
Prior to this recent research, there were academic discussions surrounding the idea that if firms adopted SaaS, organizational capabilities and learning would be lost. The thinking was that when applications are developed in house, the organization learns a great deal about the business. Which is true. Anytime we analyze how the business runs, examine processes that might need to be updated and compare your practices to best practices, we learn. Of course we learn. But do you need to develop your own application to learn or might you learn more from deploying a SaaS application? Our research showed that capabilities significantly improved as more and more SaaS applications were diffused. The more SaaS we use the more we learn about our organization. But why?
To answer this question, we start with the question of core competency. What is your business? Do you manufacture something? Are you a publisher? Do you provide services like flying people around the world, or building office buildings? Why do people do business with you vs your competitor? Do you have a unique, competitive advantage? If so, it might be worthwhile to develop an application that supports that unique competitive advantage. It might be a good idea to explore how to improve it so that you can maintain your leadership position. But if the area of the business that you are thinking about improving in house is not your core, you are better off deploying a SaaS application, period. SaaS applications have tons of industry-specific, world class features that your business can immediately start using. There is functionality that has been developed by looking at best in class processes, by understanding new industry requirements, etc. In short, SaaS applications provide a platform to start understanding important aspects of your business immediately.
SaaS Survey: Business Capabilities
The capabilities questions in our recent SaaS survey were presented to 554 respondents and were measured with a Likert scale – 1 (strongly agree) to 5 (strongly disagree):
- 86% of respondents agreed that adopting SaaS applications is a good way to foster the company’s concentration on its core competencies.
- 89% agreed that adopting SaaS allows their organization to enhance capabilities that distinguish them from their competitors.
- 86% agreed that by adopting SaaS their company can concentrate more on putting their core strategies into action.
Further, improved capabilities from SaaS diffusion were associated with increased revenues, reduced costs and improved productivity. So, the question becomes…can you afford to develop applications that are NOT your core competency? Can you better enhance your capabilities and subsequent firm performance by exposing your businesspeople to the billions of dollars’ worth of features that are already available in SaaS applications? The research indicates the more SaaS you deploy the more capabilities are improved.
One of the capabilities our research examined was organizational learning. We asked how many years respondents had been using SaaS. The average was 3.8 years. Then we asked, once SaaS was deployed, whether companies gained new insights into their business or not. 88% of respondents agreed that they gained new insights once SaaS was deployed. New Insights…think about that. Something you didn’t know about your business that can be learned once SaaS is diffused. What don’t you know about your business?
Sometimes it is as simple as a report that you couldn’t obtain in real-time or at all. Remember the marketing manager from the Automotive company we talked about in my last blog? He was able to understand something in real time reporting that wasn’t available to him in the pre-SaaS processes that the company had in place. Curious managers can find all kinds of interesting bits of information once the SaaS system is up and running. Real-time reporting that is role-based makes it easy for people to find things that are relevant to them. Things that they can fix.
Sales managers using a CRM system, for example, can see what the best account managers are doing and share it with the salespeople who are struggling. Forecasting can help the CFO understand what money will be available for acquisitions. What about the crazy supply chain issues hampering business today? With SaaS, purchasing people can get real time alerts on parts that are running low in production and whose lead times are no longer in sync with market demands for the products they are contained within.
Where Do You Start Your SaaS Journey?
You might want to start with some of the support areas of the business, like CRM, Accounting and HR. Areas where unique, competitive advantages might be tough to achieve. How many unique ways can you subtract the cost of goods sold from revenues? If you have something unique, you might want to call an accountant and make sure you are compliant with GAAP. QAD Adaptive ERP and other solutions are compliant. And that is the point. When you deploy a SaaS application or enterprise system for finance, purchasing, CRM, HR, etc., you have leading edge functions that will allow you to take your fancy programmers and FOCUS them on your core competencies. Let’s say that again, you will be able to shift your focus away from support applications that give you no competitive advantage and focus instead on your core competencies, where your unique offering is what gives you a competitive leg up in the market.