Understanding The Economics Of Cloud Based OCR SaaS How It Can Improve Document Flow And Reduce T

Published: 05th March 2010
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Software as a Service (SaaS) solutions are easy to understand if one looks at the underlying economics of these solutions, they are all about economies of scale and revenue management. This article is intended to shed some light on SaaS and Service Bureau solutions from a business perspective in an effort to remove the mystery for the non IT professional.

Working with Internet fax and OCR Service Bureau solutions over the past 10 years, I've come to see the many iterations (ASP, Service Bureau, SaaS, The Cloud) and evolution of the SaaS industry. Perhaps the most well known version of SaaS is SalesForce.com, but there are many versions of software providing a service. In 1999 while working at WorldCom as a Product Manager we used the terminology ASP (Alternative Service Provider), we often referred to our web based SaaS solutions as being "in the cloud". Today, "SaaS" and "The Cloud" are a constant topic of fodder for the IT industry, yet many of the articles are written from a technical perspective for a technical audience. When first joining WorldCom as a Product Manager, I was new to Telecom, so I sought to understand our solutions first from a business perspective, and then I filled in the "how" details understanding the technology. I believe this experience has served me well in understanding the various applications of SaaS and explaining in laymen's terms to the business units that seek to utilize these technologies. In my estimation, from a business perspective and for comparison, SaaS works economically like a gym membership. If an individual where to pay for the entire cost of the infrastructure provided by a gym, building, equipment, water, heat, air- conditioning, music, ect... it would be economically unfeasible for a single member to pay for all these cost as a single member. But when those fixed cost are spread over a number of members, all benefit from the reduced cost and also gain from the use of the services. This is otherwise known as economies of scale, and these basic business principles apply to SaaS platforms as they do in any other business. SaaS solutions provide software functionality accessed via the internet. The Servers, IT staff, utilities, or fixed cost of providing the service, are spread over the SaaS providers customer base and can be accessed and used at a reduced cost versus installing the software as a premise solution. Since the SaaS Company focuses on their software as a service as their core business, they should presumably be able to deliver it cheaper than a company purchasing the software as a support function not core to its business. The revenue management function of SaaS relates to maximizing the productivity of the SaaS platform. When spreading the fixed cost over a higher productivity percentage, which equates to revenue from having more customers, again, the service can be offered to the end consumer at a lower price. Revenue management principles are based in opportunity cost, so you can see that although SaaS is relatively new, is based on tried and true business principles that have withstood the test of time and are taught in every business school in the Country.

The same economy of scale and revenue management logic holds true for SaaS OCR which can significantly reduce the cost of manual data entry. Very simply stated, by outsourcing your manual data entry of paper to an OCR Service that focuses on data extraction, you will gain the following benefits;

· Reduced cost of manual data entry

· Improved accuracy by reducing human error and running triple pass data validation

· Guaranteed accuracy rates

· Guaranteed turnarounds times

· Elimination of peak period processing

· Validation of order accuracy with database lookups of SKU or customer info

Bridge the paper and digital divide and contact an OCR Service Bureau today and reduce your cost of manual data entry.


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