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Cloud Services and SaaS: A Smarter Way to do Business

Cloud services and SaaS can help SMBs increase efficiency and enhance collaboration using technology that would otherwise have been out of reach.

March 29, 2010

By Margaret Steen

It's a unexpected juxtaposition: According to a recent Cisco survey, only 20 percent of small businesses know what "cloud services" are, even though 75 percent of SMBs polled are already using some kind of hosted or subscription-based service to enhance their business goals. 

Cloud services, and specifically Software as a Service (SaaS), are a way of delivering technologies and applications over the Internet. It's easy to see why SMBs have been among the most aggressive adopters of SaaS: By purchasing software as hosted- or subscription-based services from third parties, businesses are freed to do what they do best – focus on their businesses, using SaaS to help expand customer relationships and improve productivity without requiring an IT overhaul. 

"They can try before they buy and then pay on a subscription basis– on a per-seat or per-employee basis – so they don't have to make a large capital investment upfront," says
Susan Scheer Aoki, a vice president in Cisco's Small Business Technology Group.

Saving Time, Effort, and Other SaaS Benefits

SaaS allows SMBs to avoid hiring extensive IT staffs, managing software upgrades, or staying current with the latest releases – and it can unleash new capabilities because it evolves as their businesses evolve, Aoki says.

"They can add users, reduce users – while the SaaS provider takes care of maintaining the application for them," she adds.

Applications based on SaaS can substantially transform a business' core operations, like the Web-based collaboration provided by Cisco WebEx or the hosted security protection of ScanSafe.

Small businesses of all sizes turn to security-driven applications like antivirus more than any other SaaS solution, according to the SMB Cloud Watch study, conducted in February by Cisco's Internet Business Solutions Group. Storage and backup applications come in a close second, with desktop publishing applications pushing third.

Doctor's Office Gains Flexibility, Efficiency with SaaS

Dr. Nicole Sheffield, of Sheffield Pediatrics in Memphis, TN, uses an integrated Cisco SaaS application from Allscripts, a Cisco partner, to manage her practice and medical records electronically – without having to hire an IT staff member for her one-doctor practice. She uses the application for her electronic medical records, patient scheduling and billing.

"It's saving me at least an hour a day," says Sheffield.

Her notes are more complete and legible compared to her previous paper-based office, as the system prompts her to include items she might have skipped if she was in a hurry. Drop-down screens also eliminate the need to type the same entries over and over.

 "I'm not writing toward the end of the day when I'm more fatigued," she adds.

Sheffield can securely access patient records from home or elsewhere if needed – unlike paper records, which can't be taken home due to privacy concerns. And because her billing system is electronic, she gets reimbursed two to four weeks faster than her previous setup.

By using the Digital Physicians Office, a solution that integrates Cisco's Unified Communications voice and data solution with Allscripts MyWay electronic health records application, Sheffield is able to achieve the benefits of electronic medical records and office management without having to hire additional staff or increase her business' IT resources.

"It enables me to be able to practice medicine instead of trying to figure out information technology," she says.

The Flexibility of SaaS

SaaS applications delivered via cloud computing offer small and midsize businesses (SMBs) more than just peace of mind – they offer flexibility as well. This is a critical component of an overall growth strategy, as businesses often find themselves at a point where they need to spin up (or spin down) resources to match customer needs.

Another benefit: SaaS providers frequently offer training to show small businesses how to make the best use of the software. "They are focused on empowering their users," says Kneko Burney, president and chief strategist with Compass Intelligence. "They want an ongoing relationship, so they provide a lot of learning."

"SaaS really helps small businesses unleash these new capabilities; It evolves as their business evolves."

— Susan Scheer Aoki, vice president, Cisco Small Business Technology Group

Because they tend to be open, SaaS applications can be more easily integrated into other elements of a small business' infrastructure – like combining an office communications system with an online collaboration platform like WebEx. Not only does this create the possibility of new uses for a single service, it helps a small business take advantage of the full value of a SaaS offering without having to switch to an entirely new platform for similar functionality.

"If you have invested time and money into software as a service, at some point you might want to plug it into an application that's in your office. With the best SaaS, it would be easy to do this," Burney says. "You have the benefit of world-class software as a service and can also build custom applications around it."

Increased Choice

In the future, SMBs will have more choices of bundled software available via the SaaS model. Look to see a push toward cloud computing SaaS services centered on communications, collaboration and security – with a focus on decreasing the complexity of these offerings for a typical small business environment.

According to Aoki, IT providers are expected to evolve their applications and delivery models to either a SaaS or subscription basis that addresses all areas of IT via scalable, relationship-focused solutions.

The gradual ramp-up of SaaS adoption is already underway: According to the survey, more than 80 percent of small businesses plan to use at least one cloud service within the next two years. And among the fastest-growing of the cloud service segments are services based on collaboration and conferencing, SaaS, and on-demand computing.

Small businesses might have trouble defining what cloud services are, but it's clear that models like SaaS are going to be redefining the small business environment for years to come.

Margaret Steen is a writer based in San Francisco, CA

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