BY| February 6, 2011
In the last 2 years, Software-as-a-Service (SaaS) as a delivery model for corporate applications has found a significant amount of support. In the aftermath of the 2008 economic crash worldwide, there has been a surge of interest in exploring the SaaS model for a variety of reasons – mainly around reducing up-front investment typically associated with on-premise license purchases (operating expenses vs. capital expenses), ease of getting up and running, the ability to opt-out if you didn’t like the software, and several others.
At the same time, customers were cautioned about the key issues to keep in mind while adopting the SaaS, such as:
- Peripheral applications, that did not touch core business activity/ processes, such as HR, CRM, Payroll, etc. were easier to deploy on SaaS, rather than core applications.
- Even if applications were deployed on SaaS, they would need integration with other enterprise applications, whether in-house or SaaS, and customers would do well to evaluate SaaS vendors for the capability to integrate with other applications/ providers
- Even if applications were available via the SaaS model, associated implementation effort such as user training, organization change management, data migration and interfaces with other apps remained. Thus it would be a mistake to assume that SaaS would significantly reduce implementation effort and costs.
- Application security, scalability and performance; and vendor track-record (longevity, number of paying customers, financial strength) were other factors to look for.
Where is SaaS being adopted the most?
Common wisdom was that SaaS applications would typically be adopted by Small and Medium enterprises since they are usually more cash-strapped than Large Enterprises. However, in an interesting research article published by Saugatuck Technology Inc., a well-known SaaS research services provider based in Westport, CT, in September 2010, it appeared that SMEs were “much more likely to still be learning about SaaS – and to not have SaaS plans in place”.
Based on responses to several key questions, shown below, it would appear that only 24% or SMEs had implemented or were implementing SaaS applications against 43% of LEs!
What Apps are most Likely to be on SaaS?
Clearly, the peripheral vs. the core argument made a lot of sense. Customers would be much more likely to trust an external service provider to manage corporate data that was not critical to its core business. At the same time, they would be much more likely to outsource apps that were not core to the business.
In a recent article, CIO.com refers to a detailed Forrester research that finally acknowledges that not all software will be successful on SaaS! Among others, it says Application Development software is successfully finding its way on SaaS. Our experience with project management software is the same!
At Digite, we have found substantial interest in our Agile ALM products in both SMEs and LEs and we have a healthy mix of both. Given our customers’ focus on collaborative software development using geographically distributed teams, both our on-premise (but web-based) and SaaS offerings have found widespread acceptance. Given the global trend of distributed technology teams, this is hardly surprising!
It would be great to hear of your perspective on which applications have worked on SaaS and which haven’t.
Sr. VP – Product