SaaS and the Outsourcing function

SaaS is not a brand new idea. It used to be called “ASP – Application Service Provisioning”. It didn’t work out very well back in the 90’s and 00’s, but now it’s back. There’s no doubt about that.
Neither Outsourcing is a new idea. It has been going on for quite some time now.
In this post I am going to explore what can happen when these two services are mixed. What business opportunities can be born for both the outsourcer and the SaaS provider, but most of all what are the benefits that the end-customer will enjoy.

First, let’s try to answer the basic question: Why do we need to mix these two services? The answer is that outsourcing will surely need some kind of “tool” to deliver what it is promising. And on the flipside, a SaaS provider tends to be somewhat “technical”. They cannot always address the real business issues of the potential client. And they surely cannot offer anything more than their software and maybe some consulting and best practices on the usage of this software (exceptions to that rule, I apologize!).

A very common outsourcing function is this of the Accounting & Financial Services. A lot of SME’s (but also bigger enterprises that have good reason to do it) outsource this function to consultants (or even small accounting firms). Another function that is commonly outsourced is the HR. This includes the management of “trivial” issues such as regulatory reporting, leaves of absence etc. but also more complex issues such as department staffing, training cycles and management, downsizing etc. The service providers will need some kind of tool to perform these tasks; and what better tool to use than a SaaS offering! Using the client’s existing systems may be difficult (the outsourcer needs to learn the millionth system; a system that they may use only for this specific customer – and this is a cost consideration) or even impossible (e.g. the customer does not have an HR system). The usage of SaaS systems offers the following advantages:
  • The outsourcer uses a piece of software that they already know and probably have ready-to-go.
  • The outsourcer need not learn new systems or become a part of the client’s existing security system and procedures.
  • The client can feel confident that the outsourcer will “jump on the horse” immediately and start doing his job, without any learning curves.
  • The outsourcer probably has (or can develop) a long-lasting relationship with the SaaS provider, so that bug fixing is instant and new releases are fast and correctly designed and implemented. When the SaaS provider needs to build new functionality, he need not “re-discover the wheel”. He has a close co-operator as an ally, who is able to actively contribute to this effort.
  • The customer instantly enjoys the fruits of this co-operation.

    In fact, this last point should make outsourcing companies turn their heads to SaaS and vice versa. It is now clear that these two functions can complement each other, thus creating strong, integrated services. In this effort, I see the outsourcer to play the first role (to go and get the job). The SaaS provider will operate in the background as the outsourcer’s “IT department” and advisor.
    This combination can create strong synergies for small/medium consultants, outsourcers and SaaS providers and open new opportunities. Is anybody interested?!
  • Comments

    1. It would not be wrong to justify the fact that such a blog enhanced with very potential information, would always help an individual and group of companies to learn, understand and make a decision accordingly in their corporate world.
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