SaaS: Food Industry Cooperatives for the Information Age

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Jennifer Kinion
Contributing Writer

 Blog post courtesy of Roger Woehl, Chief Technology Officer, SafetyChain Software.

Cooperatives have long helped small- and medium-sized food producers to pool resources and create economies of scale that deliver value to the members beyond what they could accomplish individually. Traditional cooperatives provided a means to share equipment, manufacturing, and financial services. They provided an alternative to large conglomerates and insured that individual industry interests were met.

In many ways Software-as-a-Service providers are serving as the cooperatives for the Information Age, and they are providing their member-subscribers many of the same benefits in the realm of enterprise software. Let’s look at why this is so.

Then and Now

Up until about ten years ago, implementing digital systems in food production required huge capital investment for software, servers, databases, networks, backup systems, etc. Beyond this it required ongoing costs for technical experts in setup, customization, and maintenance. The expense made it cost prohibitive for all but the most essential services, such as finance and inventory, that were relatively similar to other industries. Many unique functions like food safety, quality, and operational efficiency were left to pen, paper, and homegrown solutions.

The introduction of cloud-based computing and the Software-as-a-Service (SaaS) model has made it possible to create entirely new economies of scale for software in the food industry. A single software system with a “multi-tenant” architecture allows many member-subscribers to securely access a common shared software system.

SaaS solutions have resulted in a new breed of software providers, like SafetyChain, that are catering to the specific needs of food safety and quality management. These services are bringing automation to manual paper processes and they are driving significant new value to member-subscribers.

How Saas Resembles the Cooperative System

Unlike traditional pay-to-own software models, Software-as-a-Service shares many characteristics with cooperatives. For starters, member-subscribers to a software service are uniting with a common objective of supporting a system that solves a common need, for example a Safety and Quality Management system focused on the complex needs of the food industry. Such systems would not exists without the patronage of the food safety and quality community, and companies would be left to customize large ERP solutions to address there needs.

SaaS is also like a cooperative in that the relationship between SaaS provider and its members is a partnership, and the provider is only successful when many members are actively using the system and gaining value. This relationship ensures the incentives of the provider and members are well aligned.

More Subscribers, More Value

Another similarity is in the economies of scale. As more member-subscribers join, the better the service becomes. More subscriptions provide more investment in new features, and deeper levels of support. A virtuous circle is created: the addition of valuable new features lead to new members, which leads to more new features. Every year members get more value for their subscription dollar.

SaaS services are like a cooperative in that they thrive on the support and participation of its member-subscribers. In the early stages, a successful SaaS company relies on the pioneering early adopters who see the long-range vision and value in industry-specific software. These early adopters look beyond the limited initial feature sets and see two and three years into the future. Early validation members paved the way for later adopters. All along, the inputs and experiences from each new member contribute to making a better solution for everyone.

Word-of-mouth and sharing of experiences between current and perspective members is another essential component, creating benefits for everyone. Both positive and negative feedback helps hone the features and provide value to all the current and future members.

There are, of course, differences between a Software-as-a-Service provider and a cooperative. However in the Information Age, the similarities of sharing and cooperation to achieve a common objective are clear. It is also evident that without the willingness of members to join in, the food industry will be left without the special software tools that are critical for its needs as the big ERP conglomerates pursue more lucrative markets.