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MTS Blog: Sledgehammer and the Nut: Enterprise vs. SaaS

The idiom “using a sledgehammer to crack a nut” paints a compelling visual.  The phrase describes using disproportionate force or expense to overcome a minor problem.  In many ways this is an apt metaphor for employing a large database management software system, called enterprise software, instead of more targeted software developed for specific purposes.   

Many medical device companies, from start-ups to established manufacturers, turn to enterprise software from major conglomerates to solve a wide range of business challenges.  Companies purchase the software and are required, due to the complexity of the software, to pay consultants to adapt the system to fit their business goals and operations.  These companies also find it necessary to create whole teams of staff to keep the software running smoothly.

The alternative to enterprise software is “software as a service” or SaaS.  Medical device companies that go this route do not own the system.  Instead the companies pay a licensing fee, essentially renting the software.  The software is housed in the cloud.  While not fully customized, changes can be accommodated, and best practices inform continual updates and enhancements.  The best aspect of SaaS?  No one is needed on staff to manage the software system.

So, with all this good news about SaaS, why do so many companies stick with enterprise software and intrinsically wrap their business around these old systems?  There are three reasons companies have a hard time embracing a SaaS approach: entrenched IT, reluctance to overhaul operations, and expertise incredulity.

Existing IT Team Sees Writing on the Wall

With the adoption of the enterprise model, a company forms an information technology (IT) team to customize and support the software.  Going the SaaS direction becomes a threat to the IT group because the team either becomes unnecessary or has to dramatically change.  Members of the existing department are the experts in one giant system, they believe the enterprise software can fix any issue, and they like being in control.  With SaaS, IT will need a new perspective conducive to the SaaS model and new people who are used to using SaaS.  Existing IT will have a hard time embracing a new model, and they will be uncomfortable that knowledge of the software resides with external and not internal resources. 

Operations Have to Bend to Software, Not the Other Way Around

Most companies bend software to business.  When using SaaS, a company accepts the software’s structure, which was developed using industry best practices.  This different way of thinking about software requires that companies reconsider operations and processes.  While enterprise software remains static, SaaS systems continue to evolve through best practices collected from a large sample size, not just one company. 

External Expertise?  How Can that Be?

The large investment made in the enterprise software makes it more difficult to make a change.  But, as companies grow, using one software managed by an internal IT team, requires more and more band aids.  SaaS vendors have more expertise in a particular area, and the software is created to address the particular work flows and challenges faced by the industry.  SaaS also employs best practices from many customers to develop software.  The evolving software in the SaaS model grows and scales with the company, eliminating the need for the company to conform or to jerry rig solutions.

Important Benefits of SaaS 

  • The cost of licensing a SaaS system is far less than purchasing enterprise software.  And, the human capital cost of incorporating SaaS is vastly different than hiring an internal team to customize and maintain a behemoth software system.
  • SaaS software takes less time to implement; time measured in months instead of years required to properly integrate an enterprise system.
  • Access to best practices enables companies to be proactive rather than reactive to industry changes. 
  • SaaS systems are “purpose built” to answer specific business challenges from financial to manufacturing to distribution.  Companies often use several software systems instead of just one giant one.

There’s a lot of talk these days about legacy systems.  Legacy in terms of a person’s worth carrying over to the next generation = good.  The antiquated, mired effect of legacy software = bad.  What the SaaS approach really offers is the value of a company’s data delivered through a streamlined system, built with expertise and a specific purpose in mind, and capable of expanding and improving over time.  If harnessing the power of data just got easier, isn’t that the direction that leads to the right kind of legacy?