Software as a Service (SaaS) and Cloud Computing are terms that are becoming increasingly familiar to L&D managers. Viv Cole from REDTRAY investigates the reality beneath the hype, uncovers the benefits these technologies offer and highlights some of the potential pitfalls.

First of all, it is worth being aware of the differences between SaaS and cloud computing. 

SaaS is the idea that the software that you use on your computer is held on someone else’s computer and you access it over the internet. The provider licenses an application to customers for use as a service on demand, either through a time subscription or a “pay-as-you-go” model. Rather than purchase the hardware and software to run an application, you need only a computer or a server to download the application and internet access to run the software.

On the other hand, cloud computing involves using shared server space to run software and hold information. Whereas traditional ways of operating involve you owning/ hiring specific server space, cloud computing means that your computer tasks use spare processing capacity on pooled servers. As this capacity would otherwise be redundant, it works out cheaper for the end users.

Up-front fees are usually lower as you are paying on an as you use it basis. The costs of maintenance and updating are built in, rather than being a burden on your internal IT department, for which you may end up having to beg or borrow budget. If your IT department has already bought server capacity on an optimised basis for the current business requirements, additional server capacity can be expensive.

As the software lives outside the firewall, it presents less of a threat to the smooth running of other business critical applications sited within the firewall. Hence your IT department will have fewer hurdles to clear before it can give their sign off. They will also be spared the hassle of implementing it and finding additional server space for it.

Rather than L&D’s request being in a queue behind other requests that IT deems are more important, your software provider is in the business of providing a responsive service to you. You gain more direct control over the technology that supports your processes and people.

Implementation is your provider’s number one priority whereas it would be down the list for your internal IT department. A specialist provider will have a track record of successful implementations and will therefore be able to pre-empt issues that may hold up less experienced teams. As the software sits outside the firewall, the risk of other existing software taking exception to it is lessened.

Many providers will give you free access to improved versions of the software which are based on feedback from other clients. As your organisation embeds the software more deeply in its business processes it will benefit from functionality that other organisations have found useful at no extra cost.

As people share and store more information on the internet via social networking applications, having your L&D software outside the firewall means that it will be easier to integrate social networking into learning journeys.

As the market for SaaS matures, cloud-based solutions are emerging. These solutions offer the same benefits as SaaS, but crucially the potential for even more cost savings. Cloud computing works on the basis that you pay only according to the server space you use, rather than the server space you reserve – it’s cheaper to buy electricity from the National Grid than to commission your own mini oil-fired power station.    

Whilst there are some drawbacks to your software being hosted outside the firewall, we have found that we can mitigate these effectively for our clients.

Some of the data that you wish to capture about your learners is sensitive. If this data is on a cloud or shared server, the risk of a security breach feels higher. However, in practice the security measures that are in place for a server farm are often better than an individual company would be prepared to pay for. If you want even more assurance over confidentiality you can have your hosting on a dedicated server.

If you buy software that needs significant customisation and development in order to fit your business, you may not benefit from subsequent versions of the software. From The Bersin Report in 2009, LMS customers interviewed stated that product customisations were the one of the top 3 challenges for their current implementation. Indeed there is the risk that the software development path will diverge from the direction that you want to take. Hence it is worth selecting a provider that gives you some flexibility over whether to take updated versions and will work with you in partnership.

If the L&D software needs to share data with HR, Finance or other systems that sit behind the firewall, the task of transporting that data securely becomes more challenging. It is fairly straightforward to transfer data in an encrypted format. Although this option is more costly, it usually works out far cheaper than having to re-key data. Your SaaS provider should be able to demonstrate track record of getting their software to interoperate with common enterprise solutions such as SAP and Peoplesoft.

Both SaaS and cloud-based computing offer L&D departments the promise of paying less for their IT infrastructure. As the technology becomes more commoditised, the providers of such services that will thrive are those who are able to understand deeply their clients’ needs and translate their experience of using systems into practical business results.