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SaaS becomes more popular



If you ask Dorado CEO Dain Ehring whether it’s true that Software as a Service and cloud computing are sweeping away traditional software models for mortgage technology, he is likely to direct you to apps.gov, the government portal for cloud computing, where you will find a video clip explaining why the model is being evangelized to improve efficiency and lower costs for all government agencies. Heading Dorado’s prognostications for 2010 was the prediction that “Software as a Service adoption will reach critical mass in mortgage originator use, with more than 30% of all originations in North America occurring in the cloud.”


Two other SaaS-related Dorado predictions for 2010 were (1) that turnkey approaches to updating systems for regulatory compliance would offer lenders a competitive advantage, and (2) that new integration and interoperability capabilities would bring unprecedented expansion of low-cost choices in external mortgage services.


Though SaaS often has been portrayed as best suited for small and medium-sized lenders, Mr. Ehring flatly predicts that within five years most of the processing in the mortgage industry will be done — by large and small lenders alike — with SaaS-based technology. Why? Because today’s rapidly changing market conditions mean that large lenders no longer are willing to take a chance on lengthy and expensive implementation projects, given that “seven out of the top 10 lenders have had $100 million projects that have failed in the last 20 years.”  He noted that for large lenders even more than for their smaller brethren, “it’s very hard to map your profitability to your production needs. The SaaS model gives them that capability. Some of the largest lenders have hundreds of SaaS contracts in place,” he said. “You don’t have to educate them, they get it.”


SaaS integration specialists like Boomi, BridgeWerx and Cast Iron Systems offer white papers and blogs confirming that SaaS integration of multiple applications has become literally vital for most industries and that SaaS integration is now generally preferred over creating monolithic suites via enterprise integration.


As Phil Wainwright observed in a ZDNet column, competition among technology providers is no longer a matter of survival of the fittest, “the strong, the quick and the nimble.” In the emerging SaaS world, where connectedness and interoperability are key, it’s “survival of the fit-most.”


If mortgage industry endorsement of SaaS seems pervasive these days, that may be because no other model serves the current mortgage market as well. “Lenders are focused on one thing right now — how to grow their business while keeping costs low,” observed Don Covey, managing director of origination technology for Jacksonville, Fla.-based Lender Processing Services.

By Scott Kersnar - MortgageTechnology.com

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