On-demand has come of age—the time is now Judson Phillipssoftware-based initiatives, technology solutions, software-as-a-service
As competition for mortgage loans increases, the mortgage
industry is focused on finding better and more efficient ways to
operate. Collaboration between multiple parties, streamlining loan
processing and decreasing operation costs are high priorities. To
that end, the industry has made great strides with the introduction
of many software-based initiatives. However, most technology
solutions have been deployed using traditional means, and involve
lengthy and costly implementation cycles for a single application.
These pains are why some professionals in the mortgage industry
have yet to fully embrace the latest trends.
During the last few years, Internet technology (IT) environments
from many industries have been selecting an on-demand delivery
model, also referred to as the software-as-a-service (SaaS) model,
for mission critical applications. On-demand applications charge
per usage, not per user. Typically, an Internet connection and
secure authentication privileges are all anyone needs in the
on-demand model to access the application anytime, anywhere.
So far, so good
How far along has the industry progressed in the use of the
on-demand model? Businesses far and wide are embracing on-demand
solutions, and while it is not a new method of delivery, it is one
of the great innovations of the late '90s dot.com era. The earliest
on-demand solutions came with the rise of e-mail, customer
relationship management and human resource applications, to name a
few. They have since matured to where on-demand has truly come of
age.
Most familiar to the general public are on-demand applications
that are used daily for personal e-mail, such as
Hotmail, Yahoo! or Gmail by Google. All of these allow access
from any Internet connection. InformationWeek recently released the
results of the SaaS survey of business technology professionals.
The study revealed that 84 percent of respondents currently using
an on-demand model said the technology either met or exceeded their
expectations. According to the survey, customer service
applications, sales force automation and human resources top the
list of applications used today. Others, like payroll, corporate
e-mail and desktop applications, are still gaining in
popularity.
So, what's the difference between traditional software and an
on-demand application?
What you should know about on-demand
When comparing a traditional software environment, which is
typically installed within a corporate IT infrastructure, to the
on-demand model, the former has several differences. First, a
hardware infrastructure must be assembled to support the server or
Web-based application. Next, the application and database software
must be installed, configured and tuned. Additionally, the
application may need to be installed on each individual user's
desktop. Finally, the application needs to be updated and
maintained on a routine basis. The time and personnel required to
implement this model can prove to be quite costly to any size
organization.
In contrast, an on-demand model uses a technology infrastructure
that is already deployed, tuned and running. Many on-demand
applications only require minor application configuration to
provide corporate users with a unique branded experience. On-demand
application service providers use state-of-the-art data centers
that provide tremendous capabilities for throughput and redundancy.
The use of this type of service provides a corporation with
technology that is leveraged across numerous organizations,
enabling faster deployment and lower costs.
As companies bypass the costs associated with implementation,
management and application maintenance, overhead is reduced. In
addition, on-demand models do not lock companies into long
perpetual license agreements, as the application costs are
typically based on usage. In the traditional software environment,
if a change or upgrade was needed for the application, a patch
would be sent to the IT department or individual users who would
then have to personally make the change. There is no guarantee that
every user has applied the necessary patches to ensure application
stability. In an on-demand environment, the change is automatic,
alleviating the need for user or IT intervention.
According to the SaaS survey, the majority of business technology
professionals (69 percent) said they were adopting an on-demand
solution because of the ease of deployment, while others stated the
technologys flexibility (52 percent) and the cost-savings (43
percent).
Why now?
The mortgage industry has a highly fluctuating business cycle,
which is based on numerous macroeconomic factors. For these
reasons, it makes sense for the industry to take a hard look at the
benefits of an on-demand solution. For starters, an industry with
boom and bust cycles requires easy, accurate and quick deployment.
Secondly, paying via a usage model aligns extremely well with the
industrys unpredictable cycles and allows a mortgage company to
align its cost structure with its volume.
Flexibility is another reason to deploy an on-demand solution in
the mortgage industry. Because of the number of disconnected and
disparate parties in the mortgage industry, collaboration is vital
to close a loan. On a single loan, six or seven remote parties like
the originator, processor, underwriter, due diligence provider,
quality control professional or investor must work together to
complete the process. On-demand technology unites these parties,
allowing them to collaborate easily from a single point of access
via the Web. With on-demand technology, the loan and all of its
processes are visible and available to the authorized
parties.
And because the mortgage industry is in constant flux with new
policies, regulations and products that come and go, the industry
needs technology that can rapidly adapt. The on-demand model
provides the ability to configure solutions and deploy changes
quickly and, in most cases, automatically. As an added benefit, it
is now very common to see on-demand applications connect to legacy
or in-house applications using Web services. This further improves
the ability for an organization to fit an on-demand application to
its specific workflow.
The perception of the downsides
With all the advantages of on-demand, you may be asking yourself,
"Why not?" There are a few negative perceptions that on-demand has
yet to overcome, including that on-demand is less secure, less
reliable and there is a loss of control with data not being stored
in-house. However, these perceptions are not reality.
Because there are multiple parties accessing the system in an
on-demand environment, security is of the utmost priority. Media
coverage of stolen data reveals that security breaches typically do
not occur on the system itself but through the loss of a physical
media—such as, a hard drive or a stolen laptop. When we do
read stories about data being stolen by a hacker from an online
system, there is almost always help from someone on the inside, not
through the use of an on-demand application.
All of these concerns put security under the microscope. To avoid
these scenarios, most companies encrypt data in storage and also in
transit over the Internet to thwart would-be hackers. It is
extremely difficult for a hacker to decipher encrypted data. There
are also security audits such as SAS 70 and ISO 17799 and
certifications like VeriSign that ensure rigorous security levels
for on-demand technology.
Reliability and uptime are also concerns with little merit.
Internet technology has advanced to the point where databases,
servers and systems are far more dependable today than they were 10
years ago. The best on-demand service providers ensure uptime with
detailed business continuity planning and highly redundant
infrastructures. Usually, on-demand environments have two or three
remote sites, creating a greater level of redundancy than in-house
or corporate systems. And while most companies have policies in
place to back up data, an on-demand solution not only regularly
backs up your data, but may give you the opportunity to download
your data and do your own backups at will. For system maintenance,
users are given advance notice of a scheduled outage, and those
outages rarely occur during business operating hours.
Time to ride
On-demand applications bring many benefits to the mortgage
industry, including cost savings, secure service, reliable data and
the ability to collaborate on multiple levels. Sometimes, though
difficult to measure, the most important benefit is the anytime,
anywhere access. Imagine being on a family trip and a crisis
strikes with a loan that needs immediate attention and you don't
have your personal computer. With on-demand solutions, you simply
walk into a wireless cafe and all the necessary information is at
your fingertips. With on-demand applications offering all of the
benefits mentioned and that level of service, isn't it time for the
mortgage industry to climb aboard?
Judson Phillips is the director of product marketing for
Advectics. He may be reached at
[email protected].
