While many organizations are still trying to decide what to do about Cloud Computing, Megamation Systems Inc. figured it out a dozen years ago. This outfit, which offers computerized maintenance management software, uses a “Software as a service” platform which it runs from a data centre in Halifax.
Software as a service, or SaaS, is a way of delivering software services and corresponding data via the Internet, rather than on individual computers connected to an in-house server. All the user needs is an Internet connection and a computer with a web browser.
Megamation founder and President Bob Mutch and VP of Client Services John Snow, both veterans of the Halifax IT consulting scene, took the time to explain to me what their motivation was to go from a licensing model, whereby customers pay for individual software licences, to a SaaS model, whereby they pay a monthly fee.
They had two major reasons for making the conversion. One is the high cost and time required to maintain software. In a traditional licensing model, software such as theirs typically has a four-year life cycle, which means frequent large capital investments, for them as well as their customers, every time a new release is required to keep up with changes in the computer industry.
Also, during those four years, any required enhancements or customizations have to be done on all the desktops where that software is running which, for Megamation, is around 600 customers.
Another motivation was to simplify the sales cycle. Rather than asking a customer to make a capital investment and/or pay a huge up-front consulting fee, Megamation charges a monthly “all-inclusive” fee, that covers the software licensing and any required customization, as well as training (which is delivered over the Internet), unlimited support, upgrades, and the process required to bring data over from any system being replaced.
So sure are they of their offering that Mutch and Snow offer a no-questions-asked 30-day cancellation policy, something they can’t recall ever being invoked.
Converting from a desktop to a cloud-based software delivery model was not cheap or easy, and Megamation had to raise a million dollars to go through converting all the applications. But it has paid huge dividends, because now they have built a base of customers that keep on paying a relatively small monthly fee, month after month, with very little attrition.
As for the customers themselves, they see such value in this offering that they often ask “what’s the catch”? The catch of course is that all the costs are built-in and they do end up paying for it, but they do so in small easier to budget increments.
Also, their software is always up-to-date, there is no huge up-front fee, and they don’t have to worry about maintaining any computer platform to run it on. It becomes purely a business decision, not an IT one.
There is one big leap of faith, and that is that their data will be secure on someone else’s server, but for most organizations, that’s actually an improvement.
The head office for Megamation is in Oakville, Ontario, where Mutch currently lives, but he always wanted a strong Halifax presence. All the research and development, client implementation, customizations, and help-desk support are done out of Dartmouth, with the application running from of a data centre in Halifax.
Megamation’s target markets include food processing plants, hospitals, universities, school boards, and other facilities, where they manage the maintenance for such things as equipment, fleets, and buildings.
What’s next? Mutch and Snow see the mobile revolution as bigger than the Personal Computer movement of the 1980s, and in fact have already converted the three or four critical field-based modules to run on mobile platforms.
The great thing about SaaS, say Mutch and Snow, is that compared to the days of PC-based software, software developers now have complete control of the environment on which they work.