The following is an excerpt from Part 3 of the “Visions in the Cloud” series that appeared in the March edition of Mortgage Technology magazine. To read the full story and much more,
Software as a service is the original flavor of cloud computing and dates back to even before terms like cloud and SaaS were first used in information technology. In the mortgage industry, many lenders and servicers are just now warming up to the concept, educating themselves about the benefits, features and capacity of SaaS. But technology waits for no one.
While platform as a service and infrastructure as a service represent the latest innovations in hosted software technology, SaaS still holds a valuable place in the cloud. But like all mortgage technology, the role cloud computing plays in the industry is largely dependent on the size and type of lender or servicer using it.
There's little doubt that the cloud conversation has made it to the mortgage industry, in part as the result of continued innovations and the introduction of new products that utilize cloud computing. The discussion is also fueled by a more sophisticated audience.
The nebulous idea of the cloud was once seen as too intimidating for it to be marketed to mortgage lenders and servicers. As a result, vendors often relied on calling systems “Web-based” rather than SaaS, to avoid confusing clients. The Internet was sophisticated enough to entice companies to buy vendors' software and services.
But there is some philosophical debate on whether there is a distinction between “true” SaaS and Web-based, or Web-hosted, applications.
Some technologists argue that in order for a hosted service to truly qualify as SaaS, the system must store all customer data in a multitenet fashion on a single database. Other factors that define SaaS include the ability to quickly roll out updates and new innovations across a user base and the depth and breadth of the technology's capability.
“Anytime you can do that, it qualifies. And as long as they're offering enough breadth that it's not just a Web service, then that would strictly qualify,” said Rob Carpenter, co-founder and chief technology officer of loan origination system provider Dorado, which was acquired by CoreLogic in March 2011.
“Just because I'm hosting it doesn't make it software as a service,” Carpenter continued. “If I have people on 15 different versions and they're all on their own infrastructure, that's just Web-hosted.”
Carpenter points to early versions of San Mateo, Calif.-based Dorado's ChannelMaster LOS and the mainframe-powered Mortgage Servicing Package system of record provided by Jacksonville, Fla.-based technology vendor Lender Processing Services as examples of Web-hosted, but not SaaS, technology.
Regardless, with the advent of cloud computing-based business offerings like Salesforce.com, as well as consumer-facing cloud storage like Dropbox and Evernote, the cloud is more approachable.
As mortgage lending executives begin to incorporate SaaS and the cloud into their personal lives, the natural progression is for them to look at possible business applications with the same technology.
“It's no longer this cutting-edge thing that could put my business at risk,” Carpenter said. “Few people want to be the first ones to try something new, but once it's more commonplace, then a lot of the fear evaporates.”
Traditionally, when a lender executive is looking to update or add new technology, like an LOS, for example, the process begins by looking for a system that's going to have the least disruptive impact on the production team, which usually means going with a technology that staff members are familiar with.
The delivery method of the software has typically been an afterthought for executives. But that's changing, as recent cloud adoptions at Freddie Mac, ING Bank, Starkey Mortgage and others have shown.
And for larger institutions that were the early adopters of cloud computing, the expectations have increased. Users of cloud-based systems are now demanding more flexibility, customization, performance and other features out of their vendor partners and applications.
“When we started, the things we put in our contracts on the availability of the application would no-way fly today. There's no chance,” Carpenter said. “People are more sophisticated and have bought enough stuff from other cloud-based providers and they now have an expectation for it not to be almost as good as what they ran in-house, but should be significantly better than what they were running in-house.”
To read the full story, download the latest free e-edition of
