Why Enterprise SaaS Is Essential to Digital Transformation

Depending on who you ask, digital transformation can mean a myriad of things.  However, in general it relates to the adoption of digital technologies to optimize or differentiate products, processes, and services.   

Over the past decade, the implementation of software as a service (SaaS) to replace on-premises solutions has been recognized as vital component of many digital transformation initiatives for its ability to enable any or all the goals listed above.  For those who view SaaS as just another way to deploy software this may come as a surprise.  But, in fact, the benefits afforded by the deployment, architecture, and licensing model of best in class enterprise SaaS offerings align surprisingly well with the broad goals of digital transformation. 

Often this misunderstanding is a result of some common false assumptions about SaaS technology.  SaaS may be most common as a delivery method for apps and lightweight solutions, but enterprise SaaS is just as the name implies: enterprise software technology, with all its functionality and power, architected and delivered to take full advantage of modern computing technology.

With more and more solutions becoming available as enterprise SaaS offerings, especially in the engineering space, it is important to understand how SaaS can be leveraged beyond the capabilities of traditional software to improve your business, build resilience against disruptions, and enable the agility and flexibility needed to be a disruptor.

3 Ways to Leverage Enterprise SaaS

1. Focus Resource Allocation 

Every company is reliant on information technology.  For decades this meant that even companies that didn’t sell software had to spend resources implementing, maintaining, and updating on-premises software to support their operations.  

With the rise of digital transformation, companies can be far more strategic when it comes to IT: investing in IT where value is added and divesting otherwise.  The industrial internet of things (IIoT) is an example of the former, where integration of IT and operational technology (OT) can greatly improve operation efficiencies and enable new business models.  Alternatively, SaaS enables the later, the strategic divestment of traditional IT operations, which can be equally impactful.

By consolidating the costs of maintenance, hardware infrastructure, and related IT overhead across all end-users, SaaS vendors can leverage vast economies of scale to deliver a better software experience at a lower total cost of ownership.  End users who adopt enterprise SaaS solutions in lieu of traditional on-premises software and hardware infrastructure can thus significantly reduce the time and resources spent on IT related business enablement and operational support.  Offloading these supporting IT responsibilities allows organizations to focus their effort on the operations that directly impact business success: new product development, manufacturing, etc.  

2. Enable Business Agility

“To compete and succeed today, companies need to stop viewing change as a place, or an outcome that can be achieved. Instead, companies and their employees need to embrace a constant pace of change. From a place, to a pace.”  - Jim Heppelmann, CEO, PTC

This quote by Jim Heppelmann was in reference to digital transformation, but it rings equally true regarding the adoption of SaaS solutions. The value gained by adopting a SaaS solution to replace tradition on-premises enterprise software is not just a function of the immediate functional improvements over its predecessor (the change in “place”), but also the future improvements and growth that are enabled through a SaaS deployment model (the change in “pace”).  

SaaS solutions enable this unmatched pace, or business agility, in two primary ways.

First, with effortless scalability SaaS solutions can meet the ever-shifting demands of its user’s business, whether that means scaling up to meet growth needs or scaling down in times of constriction of restructuring. 

The second way SaaS enables business agility is through the continuous improvement of the solution.  While traditional software deployments require purchase of new licenses and upgrades to new versions in order to access the latest and greatest technology the vendor has to offer, SaaS simply gets better with continuous updates.  The combination of effectively limitless scalability and continuous functionality improvement means that companies that rely on SaaS essentially future proof their technology investment and are therefore afforded much greater agility when it comes to supporting their technology needs going forward. 

3. Increase Customer-centricity

As companies transition to SaaS, their software vendor becomes their partner, having far more dependence on and given far more ability to contribute to their success.  In turn, SaaS customers can take advantage of this relationship and the benefits of SaaS to become a better partner in their customers success. 

Of the five key advantages of SaaS identified by PTC, improved collaboration capabilities will likely have the greatest impact on value chain relationships.  The collaboration improvements provided by SaaS solutions can come in many forms depending on the application and are enabled by new software architectures such as multi-tenancy and non-relational databases.  Capabilities include: 

• Simultaneous document viewing/editing through SaaS-based computer aided design (CAD).
• Controlled processes for sharing documents with external organizations through SaaS-based product lifecycle management (PLM).
• Improved ability to assist customers in the field with SaaS-based augmented reality.  

Thus, the improved value-chain collaboration capabilities afforded by SaaS solutions enable users to improve upon their products, processes, and services, aligning perfectly with the goals of digital transformation.

Final Thoughts

There is no magic bullet to achieving digital transformation, however, shifting from traditional on-premises to enterprise SaaS solutions for your software is a relatively straightforward strategy that can deliver immediate and continuous benefits.  It is for this reason that software markets such as human capital management (HCM) and customer relationship management (CRM), where SaaS was first introduced at an enterprise level, have largely moved away from on-premises software.  Now that SaaS is becoming available for PLM, CAD, and other engineering related enterprise software, engineering organizations must make similar evaluations.