SaaS in perspective

SaaS in perspective

While SaaS may be cheaper, faster and better for some applications, it also introduces new risks and integration issues.

Software-as-a-service (SaaS) is the most popular subset of a broader cloud computing trend.
“Come on … forget the trials and tribulations of in-house IT … short circuit the whole legacy fiasco and just buy as much computing as you need, when you need it, from the internet! It’s cheap, easy and safe!” Well, clearly this pitch appeals to a growing number of organisations., a leading SaaS exemplar, reports revenue of more thanover US$1 billion per annum selling its SaaS CRM offering to more than 59,000 customers. Not just small companies either, with more than 150 of its customers having more than 1000 users on the system. Salesforce claims to have captured around 10 percent of the CRM system market.

An increasing range of applications are now available as SaaS offerings including:

• Office productivity and collaboration: for examplee.g. 37Signals, Cisco Webex & Postpath, Google Apps and Docs, LotusLive, Microsoft Business Productivity Online Standard Suite, Oracle Beehive On Demand, Zimbra and Zoho.

• CRM: for example NetSuite, Microsoft Dynamics CRM Online, Oracle CRM On Demand and Salesforce.

• Accounting/ERP: for example. NetSuite, Quicken Online and SAP BusinessByDesign.

• Enterprise content management: for example. Alfresco, EMC Atmos and SpringCM.

• Service management: for example InteQ, LevelPlatforms and ServiceNow.

SaaS offerings radically simplify the way applications are sourced and operated. Customers can try and buy services online; provisioning is simple and automated; service catalogues, architecture, APIs and per-user-per-month pricing are transparent; services are standardised but configurable and evolve iteratively; data processing and processing capacity is seamlessly scalable and service performance is reported online.

Magic! A new SaaS application can be up and running in hours or days with minimal financial commitment. Since when has that been possible with in-house IT? It is easy to see the appeal of SaaS from a user perspective … for some applications at least. The sweet spot is apps with straightforward integration, that address generic needs and that are “‘safe”’, or even better, outside the firewall.

In addition, the boundaries between on-premises, SaaS and other cloud computing variants are blurring. Microsoft and IBM Lotus software seamlessly interacts with their "live" services. Oracle software can now be deployed on the Amazon Web Services cloud platform. We are starting to get to the point where it is more a question of “how much cloud computing, when and where?” rather than “SaaS or not?”

While SaaS may be cheaper, faster and better for some applications, it also introduces new risks and integration issues – the sort of things that burn CIOs long after the initial joy has faded. Here are five things to think about to ensure that SaaS applications are a welcome addition to the enterprise IT portfolio:

Don’t assume that it isn’t already happening in your organisation – There are almost certainly pockets of SaaS adoption in your organisation already. Find out what is going on.

Don’t assume you can, or should, ban SaaS - Iif a business unit decides that they need/want/prefer a SaaS wiki or content management tool to meet a business need then they will find a way, unless you provide a viable in-house alternative. Bans just drive behaviour underground.

Provide policy guidance – “Mmay the force be with you”. Be on the front foot with providing users with policy guidance on SaaS applications and cloud computing – when to use, for what and how to manage and so onetc. Provide clear guidance on security and data privacy risks and obligations and on strategies for avoiding unwelcome ‘”lock-in”’ and loss of control over, and ownership of, data.

Include SaaS in the architecture – Iinvestigate the integration implications of SaaS APIs and build integration solutions into the enterprise architecture. Provide proactive architecture policies, standards and integration solutions.

Add SaaS to the enterprise IT offerings – “Hhere’s one we prepared earlier”. Consider the merits of adding selected SaaS applications to the formal enterprise IT portfolio as “‘IT light”’ solutions, perhaps within a framework such as NEC’s Applications Net that provides single sign-on, integration and aggregated billing for a menu of SaaS apps.

SaaS can be viewed as an unwelcome way for adventurous end users to short circuit the IT organisation – “look Ma, no hands!” – but it is also a new weapon in the CIO’s arsenal of tools to meet user’s needs. CIOs should embrace SaaS within the enterprise IT portfolio and be on the front foot, to ensure that SaaS apps are used for the right things in the right way.

The bottom line is that SaaS is like public transport and on-premises software is like owning a car. Both are good for different journeys, but tears result when user expectations are not aligned with the characteristics of the mode of transport or unqualified drivers are at the wheel.

Steve Hodgkinson is research director, public sector, for Ovum in Melbourne. Email him at

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