It's a model which lets users move away from the hassles of ownership, management and traditional full-time license and upgrade costs that existed in a subscription model, by allowing them to move to a pay-per-use rental model delivered through the Web.

Ramco, the ERP vendor synonymous to a rare breed of indigenous players in a market dominated with foreign ERP majors, has come out with what it calls India's first end-to-end SaaS ERP.

The over $800 million Ramco group's ERP arm Ramco Systems that has a total of 100,000 users, already boasts about 2000 users with 150 customers for the new SaaS product.

Ganesh Subramanian, head, Sales - OnDemand ERP Ramco Systems, talks to Pratima Harigunani of CyberMedia News on the opportunity and challenges around SaaS at a time when leaders like SAP are reportedly trying to crack a profitable formula in the software-as-a-service paradigm. Excerpts:

ERP majors are still struggling to make SaaS work while their profit margins are not taking a toll. How do you ensure that your revenue stream is not impacted when you wean away the customers from a yearly pricing model where annual fees and regular upgrades make the seller's revenue pipeline perennially full? Is there a cross-selling or up-selling benefit?

The profitability stage is still to be reached. It' s a growing model that will take time to deliver profits. The benefit for us is acquisition of customers, customer satisfaction and predictability of revenues. Yes, with SMBs we get new and fresh customers with SaaS who are potentially attractive for next stages of ERPs.

How tough is competition in this territory of ERPs?

Going forward all ERP majors would come to this model. We are tapping it at the initial stages and it is attractive especially for the SMBs who will form majority of the market and do not want to invest heavily into capex.

What roadblocks in particular do you see in context of India when it comes to SaaS?

Internet and the relevant levels of bandwidth for SaaS is a major concern. Then there are issues like consumer's psyche on recovery model etc but I see that interest levels are picking up especially in the SMB space.

Does SaaS work well on pan-enterprise requirements and security issues where multiple users are hosted on a single web-server outside?

Be it client-architecture where a user chooses to make his own organization IT savvy or a service architecture model where the user chooses to make the client accountable, scalability is not an issue. As to concerns on management and security, it's a multi-tenancy technology. The software would appear differently for each user whenever he/she plugs in as per their domain.

Your lessons so far?

Set the value proposition right, keep up with the expectation because each customer considers its business unique. Even if SaaS is a new model, the selling experience does not change too much.