The Case for Web Based Applications-Part II

You don’t need a generator at your office to have electricity, why have a computer server to store your data?  Producing your product with the highest quality at the lowest cost is your goal as a business manager.  Let other people handle the tasks that don’t add value to your product.  In most cases, someone else cleans the office or handles the complexities of payroll, right? Why are you defragmenting your hard drives and backing up your data.  Let someone else do it. 

When purchasing software to help your business you want something that meets your needs today and can provide more functions as your company grows.  Don’t let the hidden costs of extra hardware and maintenance outweigh the benefits of the software.  Don’t pay for tomorrow’s capacity today.   

Let’s look at some of the advantages of interenet based software to the software company.  For starters, distribution costs are dramatically cut.  Currently a CD is shipped to each customer, with installation instructions that need to be followed exactly.  If everything is stored on an internet server the software is only installed in one location.  Updates can be done more often.  All customers are automatically on the same version.  As the business environment changes, the software company can be more responsive to fixing bugs and adding features. 

Backups are done by professionals so the data is more secure.  Errors that might go undetected by a user will be spotted and fixed by a technical expert.  Rebuilding database indexes after a power failure will no longer be done by end users.   

With the economies of scale, solutions that are cost prohibitive for individuals can be implemented.  For example, almost every business mails invoices to its customers.  This entails printing, folding, stuffing and stamping each invoice.  These time consuming, but necessary chores, do not add value to the small business.  Now, these invoices can be generated, efficiently, at the server side.  By combining the mailings of many small companies, costs are reduced because supplies such as paper can be purchased at bulk rates.  Fancier equipment can be used such as fast full color laser printers giving a polished, professional look to small company mailings. 

The pricing model changes when a central server is used.  Most complex software offering solutions for specific business problems sells for thousands of dollars and carries additional annual maintenance fees.  The costs are the same for a small office as a large one.  This can be changed to a monthly subscription fee based on usage.  If you enter 100 transactions in a month, you pay less than someone with 1000 transactions.  This converts a one-time sale of a product into a recurring sale of a service.  The software vendor will put more effort into improving the service in order to retain the subscribers.  

If a client decides, the software does not meet their needs they can move to a different product without the barrier of throwing away the large upfront cost.  For whatever reason the software is a poor fit for some clients.  These clients either never should have purchased the software in the first place or have outgrown it. Without the upfront cost, these clients can move to a more suitable product.  This also benefits the software company.  Instead of spending time & resources forcing the product to meet the needs of a few customers that effort can be targeted to the primary market.    

By moving the programs and data from a computer sitting in the office of a small business to a server maintained by a technology company you increase the efficiency of everyone involved.  Complex technical tasks and time consuming routine work is moved out of the office, leaving the staff to concentrate on what they do best.  

So far we've talked about the benefits from rearranging current tasks such as backups and running reports.  Next I’ll look at the really exciting changes this concept brings to small businesses.  

The ability to simplify means to eliminate the unnecessary so that the necessary may speak.  -Hans Hofmann

You have to recognize when the right place and the right time fuse and take advantage of that opportunity.  There are plenty of opportunities out there.  You can't sit back and wait. -Ellen Metcalf 

The sole advantage of power is that you can do more good.  -Baltasar Gracian, The Art of Worldly Wisdom, 1647

Engineering is the science of economy, of conserving the energy, kinetic and potential, provided and stored up by nature for the use of man. It is the business of engineering to utilize this energy to the best advantage, so that there may be the least possible waste. -William A. Smith, 1908

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