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The Case for Web Based Applications-Part II

© Herb Wexler

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 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 a central 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 experts 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 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.

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