As we all know, firms across the globe have been using enterprise software for decades now, that serve very well the requirements of functions such as accounting, ERP, banking, and HR. The delivery mechanism of such software has typically been ‘on-premises’, which involves installing the software on customer infrastructure.

However, over the last few years, concepts such as cloud computing, on-demand software, and Software-as-a-Service (SaaS) have been gaining ground as alternatives to on-premises deployment, and such software is being successfully offered for functions such as CRM (customer relationship management), accounting, and even ERP.

Changing Trends
On-demand software, in fact, has gone from being an interesting concept to a real option that most enterprises consider seriously. For instance, Gartner has named cloud computing in the number one position in its list of top 10 technology trends for 2010. When considering software purchase, a strong factor to consider is the economic downturn and resultant pressure on companies to stay competitive, while keeping costs under tight control. In such a situation, it’s difficult for companies to justify high capital expenditures on implementing traditional on-premises enterprise software. SaaS or on-demand software, on the other hand, become far more viable options for organizations to consider. In my recent interactions with CEOs and CIOs of firms across various segments, sizes, and markets, I found a noticeable shift in attitudes. There is more willingness, acceptance, and openness to consider such an alternative; in fact, in some cases, there exists a preference to implement on-demand solutions.

Concerns Against On-demand Software – How Relevant are These Today?
Before we speak about the benefits of on-demand software, let’s take a look at some of the traditional concerns against on-demand software. While on-demand always seemed like a compelling economic argument with lower upfront capital expenditure, companies have always been wary of data and applications hosted on external infrastructure due to concerns on data security, lack of control, and user experience.