Software as a service is slowly catching on with retailers

Software giant SAP will later today launch business software that’s been developed specifically to be delivered as a service over the web.

This model for IT delivery isn’t new. Several smaller software firms such as Salesforce.com and RightNow are building their businesses on it. And it’s a model that has had several previous incarnations under several different names.

But now the largest software vendors that many retailers have relationships with – SAP, Oracle, IBM and even Microsoft – are slowly but surely making stronger commitments to the idea of software-as-a-service.

So far, larger companies in general have shown reticence to adopt applications that are hosted and operated by software vendors, despite the overall cost and Capex benefits of buying a per seat service on a monthly basis, rather than shelling out for upfront enterprise licences and then having to run the software themselves.

But for retailers this rent rather than buy culture is already engrained in other areas of the business. From property to logistics, retailers have been happy to have the assets involved off their books, and capital expenditure to be focused on stores.

Many retailers have not been convinced by the arguments for wholesale outsourcing of their IT departments. However, software-as-a-service offers an alternative way to change the dynamic of the IT department from being focused on day-to-day operations to a focus on strategy and development.

And already retail boards and IT directors have been prepared to accept software-as-a-service to deliver a platform for their web site.

While retailers will often say that their business is too different from any other to use standardised software, the emergence of this model for other core business applications may well prove them wrong.

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