One lesson construction companies have learned from the economic meltdown is that to survive, they must lower costs intelligently.
Successful companies have discovered how to leverage technology by consolidating information into one database and integrating financials and operations into one system. Using construction Software as a Service (SaaS), which offers a sophisticated, integrated software system without a large initial capital expenditure, can make the difference for a company looking to weather the economic storm.
Software breaks down into two main models. The traditional model, called on-premise, is purchased by a company and installed on its computers or servers. A common example is Microsoft Office. The software remains in the computer, and other people can’t access it unless the file is placed on a server or emailed to another user.
SaaS, however, is stored on the software company’s servers, with users accessing the application through an Internet connection. A common example of SaaS is a free email service, such as Hotmail or Gmail. The user logs in, reads and sends emails, and the information is stored on the email provider’s servers, not on the user’s computer. The email can’t be accessed unless the user can access the Internet.
SaaS shouldn’t be confused with web-based software. Most construction software solutions are web-based, meaning they work with an Internet connection. But, because the software solution is hosted on the company’s servers, not the software vendor’s, it is not considered SaaS. A web-based solution often requires a construction company to add hardware and maintain the network.
SaaS also is confused with cloud computing. Although cloud computing is the technological infrastructure on which a SaaS operates, it involves more advanced technology, such as virtualized servers.
SaaS Advantages
SaaS uses a subscription-based model in which the company avoids a large upfront payment by spreading out the payments during a period of time based on monthly or yearly schedules. Some solutions even offer a per-project option, which can be advantageous for companies that have a large project on the horizon, such as a federal government stimulus project, and know that their current software system can’t handle all of the requirements.
With SaaS, a contractor doesn’t need to purchase and maintain hardware, and the time from implementation to deployment is often faster than an on-premise solution.
Another advantage is that SaaS allows small and mid-sized contractors to access software solutions designed for larger companies. The more valuable the software system, the more complicated it is to use and maintain. Some large contractors have an entire IT staff devoted to managing the system and too often, the core competency of the contractor—building buildings—is diluted by the need to keep the system up and running. With a SaaS solution, the burden of maintenance is placed on the vendor, freeing up the contractor to focus on completing projects, not managing IT systems.
SaaS Disadvantages
The main disadvantage to SaaS is that the pricing system is similar to leasing a car: Even though payments are made, ownership is never turned over to the contractor. For construction software, this means an inability to customize the software system. Customization is a major selling point for most construction software solutions because contractors often have unique business needs.
With a SaaS solution, the contractor is locked into performing the business process, such as job initiation, the way the vendor designed it. This could lead to implementation issues and hinder widespread adoption, but a savvy contractor can turn over inefficient processes and adopt new, better methods.
Because the SaaS solution is stored on the vendor’s system, so is the information, and the contractor has no control over who can access sensitive financial data. Employee turnover and disaster recovery then become factors, as does access to legal documents. The best way tomitigate these risks with the software vendor is to clearly define contingencies for lawsuits and establish protocols concerning access to the data in thecontract.
A contractor should choose a solution—on-premise or SaaS—that stores all mission-critical information in one, central database. A fully integrated solution reduces data entry, eliminates errors and provides information for executives to make crucial business decisions, which in turn lowers overhead costs. Instead of having multiple software vendors for multiple systems, a contractor can reduce software support payments by paying only one vendor.
These advantages, combined with not having to make a large initial payment, can make a construction SaaS solution the edge a contractor needs to survive the recession.
![]()
Wednesday, February 8, 2012