Of all the puzzling acronyms that currently dominate the technology world, none is perhaps as ubiquitous as “SaaS”.
An acronym for “Software-as-a-Service”, there seems no end to tech firms today proclaiming themselves to be providers of such solutions. The SaaS market is seen to reach a value of US$307.3 billion ($420.2 billion) by 2026 at a CAGR of 11.7% from 2020 to 2026.
SaaS is a method of software distribution where users can access an application online via cloud instead of having to download a software to run it. Rather than paying a one-time upfront fee for permanent licensing, clients pay a subscription fee to use the software. Clients can also outsource IT responsibilities, such as troubleshooting and maintenance, to the providers while avoiding spending on excessive hardware.
“SaaS changed the traditional software application [business model] from buying to renting,” says Singapore Management University (SMU) professor of Information Systems Ma Dan, adding that renting makes more sense for firms with low-budget or sporadic software usage. “Buying is expensive, and there are a lot of hardware implementations and business costs. [In contrast], renting means you don’t have to pay a lot [as you only] pay when you want to use it.”
Melvin Yuan, founder and CEO of SaaS start-up Starboard, also notes that SaaS ensures software is kept up to date. Previously, software users would have to pay more to buy the newer version of a given software or put up with using the outdated version they purchased. With SaaS, users can enjoy new features instantaneously upon logging on for their next use.
This technology is not new, having been around for about two decades. But the business viability of SaaS, says Ma, stems from the maturation of the supporting technologies like improved network infrastructure and virtualisation technology that can serve multiple users.
Professor Dinh Tien Tuan Anh from the Singapore University of Technology and Design (SUTD) also argues that the shift of SaaS away from largely enterprise to consumer uses has increased its public profile.
“People have been using SaaS for longer than they have realised. Gmail and Google Docs are [some examples]. In the old days, you had to access the company server to get an email address,” Anh says in an interview with The Edge Singapore. Nowadays, most business emails are powered by SaaS, highlighting the growing acceptance of SaaS as a mode of software delivery.
Organisations are showing an increasing preference for using SaaS to run their business. Photo: SuperOffice
Cutting manual labour
One of the most significant use cases of SaaS technologies is to serve as a labour-saving technology. While we convince ourselves the contemporary economy is knowledge-driven and creates jobs requiring “higher-order thinking skills’’, the fact is that there remain pockets of corporate drudgery that technology has yet to render obsolete. Every skilled worker deployed to fulfil such roles is one less employee performing more value-added tasks.
Nowhere is this more prevalent than in the world of corporate entity management. This basically involves companies managing vital information and documents in an orderly manner to keep the firm in compliance with regulatory requirements.
This could involve generating corporate resolutions, containing board approvals, generating documents and doing due diligence work.
While such work is often tedious and time-consuming, the workers in those roles tend to be knowledge workers, many of whom did not seek out additional qualifications to perform menial tasks. The nature of those tasks also risks increasing human errors. This not only causes more time to be wasted correcting mistakes, but also compliance costs should these errors need corrective action.
“All the work that takes you hours can actually get done in a few seconds or minutes with an automated platform,” says Yuan. With a computer that is able to perform such tasks more quickly and efficiently than a human being, less workers are needed to complete the job on time. It also frees workers to do more value-added tasks like providing client counsel, maintaining client relationships and developing corporate strategy.
StarBoard also aids in this strategic process by enabling easier business intelligence analysis. Instead of having to sort through reams of data manually, businesses can store all that information on a SaaS and call them up at the snap of a finger.
Best of all, that data is captured in real time, allowing for the most up-to-date analysis to take place.
Improving accuracy
Accounting tech firm BlackLine also uses SaaS to improve accounting accuracy — a corporate function that tolerates no errors. It found that just one in two Singapore-based C-level executives are completely confident in the accuracy of their firm’s financial data vis-a-vis 56% globally, with this proportion falling to 28% among finance and accounting professionals. It reports that 29% of respondents felt this was due to “outdated processes and clunky spreadsheets”.
“We’re talking about a platform or solution that can negate as much as possible the intricacies of mistakes,” says Terry Smagh, senior vice president and general manager for Asia Pacific and Japan at BlackLine. A survey of accounting and tax leaders by Bloomberg BNA found that incorrect entry of manual data into a reporting system topped the list of common tax, accounting and financial reporting mistakes, with 28% of respondents citing this as a challenge.
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To combat such errors, BlackLine’s approach is one of “continuous accounting”, which uses SaaS technology to embed accounting into daily tasks. Instead of keeping accounting work to the end of the month, its SaaS solution uses automation to capture data from daily activities immediately. Besides reducing the occurrence of human error through the tedium of data entry, automating this task frees up highly-trained accountants to do more strategic tasks too.
Push for globalisation
Real-time accounting also ensures that accounts are in line with compliance regulations. BlackLine, says Smagh, is ISO-certified and has undergone stringent checks from both accounting and technology compliance perspectives. Having such a “technology” ensures that accounts go through the proper checks and procedures as well as possess a security blanket and single version of control that will satisfy increasingly strict financial compliance requirements.
But for Yuan, the long-term goal for StarBoard’s SaaS solutions is not just local, but global. The ease with which his SaaS can perform corporate entity management can also be replicated within different regulatory environments abroad. In 2019, Enterprise Singapore dubbed “going global” as being the “new norm” for local SMEs, highlighting the need for SaaS solutions to tailor their offerings to these increasingly global ambitions.
We envision a platform that’s beyond Singapore. Our vision is a platform where businesses at the push of a button can expand into any country.Melvin Yuan of Starboard
Previously, starting an overseas business involved finding new service providers like accountants and lawyers to kickstart the process. This essentially means reincurring costs in terms of time, effort and money that one has already expended when starting local operations.
As a single company automating corporate management functions for multiple parties, StarBoard can help businesses scale all regulatory compliance work. Its SaaS solution merely draws on existing data and records and repackages them according to the needs of the new regulatory environment. Proprietors can now create subsidiaries and complex organisational structures on a single platform, a process that is both cheaper and less clunky.
For Smagh, SaaS creates an opportunity for accounting to be more globally accessible. “Standardisation of processes is extremely key,” he states, noting the importance of ensuring a common basis for cross-engagement with teams across geographies and managing multinational projects in real time. This is especially so with Covid-19, as remote working requires software to be available outside the office and across borders for collaboration.
But more than just serving as a means of making work easier, SaaS technologies also promise to revolutionise existing industries. UK “banking-as-a-service” firm Railsbank — which was named one of the top 100 European and Israeli cloud firms by Accel last year — seeks to use its software to embed financial services into apps or customer journeys. API services by Railsbank include issuing deposit accounts to automate receivables and launching credit cards.
Democratising finance
“We want to be the category leader that enables any business or brand to rapidly prototype, launch and scale financial products globally,” explains Nigel Verdon, Railsbank’s CEO and co-founder.
Among the firm’s notable clients is Singlife, a popular insurance savings business offering up to 1.5% interest on savings. Railsbank helped Singlife develop a deposit account and debit card facility that allows users to save and spend money with them.
According to Railsbank’s website, the process of applying for such services is under 30 seconds, with applicants potentially walking away with an API solution within two hours.
Railsbank has a series of APIs that users can use with little upfront costs to create and scale a positive user experience for clients in need of financial services. All financial certification and licensing — which are difficult to acquire — are obtained by Railsbank and “loaned” to clients.
Railsbank collaborates with young FinTech firms that can use these APIs to create creative new solutions to real-world financial challenges.
In the UK, for instance, Railsbank worked with WageStream to help workers track, access, manage and save their wages in real time, reducing financial stress and reliance on predatory lending. Verdon also sees a chance to promote financial inclusion among segments of the population underserved by financial services.
“You need that diversity of solutions in markets to address those segments,” he says. Newer players in the FinTech space, he adds, serves as competition to bring about “investing-class” solutions to financial challenges.
Development of multi-currency credit cards, for instance, was driven by young firms like Singapore-based payment services company YouTrip and UK-based payments FinTech firm Revolut entering the market, prompting markets to compete over resolving the foreign exchange challenges faced by travellers abroad.
More regulation needed?
The ones best placed to serve consumers’ financial needs may surprisingly not be banks but firms in other industries.
A sportswear company like Nike, for instance, would likely better understand the preferences and needs of a sneaker collector than their bank.
While traditional banks are unlikely to face disruption in terms of lending and storage services, there will be more basic financial services switch as payments are likely to be increasingly carried out by other firms that better understand their customers.
To be sure, SaaS technologies are far from perfect. SMU’s Ma, for instance, highlights that SaaS solutions may face challenges enforcing data security due to the open nature of the cloud. SUTD’s Anh also notes that the remote location of data makes it susceptible to cyberattacks. Greater regulation, he says, is key to better protecting data transacted over SaaS.
But there is no doubt that SaaS will continue to be the dominant mode of software delivery. “There is plenty of room to grow and meet the evolving needs of customers and enterprises. The next decade will be defined by the maturation of this complex, exciting industry,” said Cerego CEO Paul Mumma in Forbes recently.
Old as SaaS technology may be, its story is perhaps only just beginning.
Main photo: Unsplash
