SURVEY

Page 8                                                                                                           Thursday, June 1 2006

Cheaper broadband a boost
for online software services

Customers access applications for a monthly fee, writes Jennigay Coetzer

LOWER-cost broadband comm- unication is making it more viable to provide application services that allow companies to access software functionality on- line for a monthly fee.
      Microsoft has developed a seperate business model to enable its distribution channel partners to provide hosted soft- ware solutions and build licence fees into customers' aplication rental packages says business group manager Derek Kudsee.
      "For example, some compa- nies only want to use the sales activity tracking functionality in the customer relationship man- agement module to track cus- tomers and previous interaction history and look at the length of sales cycles."
      Alternatively with a hosted enterprise resource planning solution (ERP) customers might want to rent specific financial accounting, manufacturing, dis- tribution, warehousing or logis- tics functionality, he says.		         Then as the business grows the company may need to send out bulk mailshots and can then negotiate additional rental for this functionality based on the number of users. Later on the company may want to to set up a call centre and track customer call history, says Kudsee.
      Richard Halton,MD of local IT company Exordia, says they set up a data centre to provide application services as far back as 2001, but realised they had entered this market too early.
      He says at the time software suppliers did not understand the concept of application rental and customers were comfortable with the traditional way of buying and installing applications.
      "But today consumers and businesses are used to internet banking and buying goods online and it is no longer such a strange concept," says Halton.
      He says the company hosts the Microsoft Axapta and Softline Accpac financial accounting		   application and provides e-mail hasting using Microsoft Ex- change. Companies pay a mon- thly fee per mailbox and users are not aware that their e-mail is be- ing hosted and managed off-site.
      "We also provide an online payroll application that can be used on a software functionality only or on a full administration service basis."
      Local software developers are ahead of the bigger players in un- derstanding that annuity-based software as a service model makes financial sense, he says.
      In addition, when many comp- anies are using hosted services there is no piracy issue and soft- ware upgrades are easier, he says.
      Halton says the average up- grade life cycle of an ERP system is five yearswith in-house sys- tems. but with a hosted model the software is refreshed by the ser- vice provider as part of the rental.
      Sybille Mccloghrie, CEO of Symelation, says that smaller companies have more of a service		   delivery mindset and see the merit in tapping into software functionality online.
      "They are looking to use spe- cific software functionality that suits their specific needs, instead of purchasing a one-size-fits-all product."
      She says Symelation and Internet Solutions have set up an application service delivery plat- form that enables IT companies to provide on-demand software functionality to customers in spe- cific sectors for a monthly fee.
      The first application on offer is an insurance claims service that can be accessed by all partici- pants in the process, including the broker, their customers and the insurance company, says McCloghrie.
      Brokers can access the service from anywhere and from any de- vice to initiate customer claims.
      The data then flows between the broker, the assessor and the insurance company and the cus- tomer can view the approval and
 

Sybille McCloghrie ... smaller companies ... see the merit in
tapping into software functionality online
payment process online, she says.
      Insurance companies can take up the service on behalf of thier broker network as a means of monitoring their activity and per- formance and engendering loy- alty, says McCloghrie.
      She says several pilots are planned for local government de- partments to provide them with 		  on-demand application func- tionality such as e-billing, risk management and budget plan- ning workshops, and debt- collection services.
      "They access this functionality online on a piecemeal basis and then take it in-house once they have the skills resources and finance to do it themselves."