SaaS vs on-premises software

SaaS vs on-premises software

With the popularity of software-as- a-service for customer relationship management, enterprises are facing new challenges in integrating data.

Beyond keeping the client happy, customer relationship management (CRM) software is becoming a powerful tool. It collects customer data, which integrates with other applications to perform business analysis and forecasts. As software-as-a- service (SaaS) is turning mainstream, data integration can be a burden for IT executives. With the ease of use and popularity of SaaS, business users are bypassing IT in launching the on-demand CRM applications.

"We believe 65 to 75 per cent of SaaS applications sold so far have been to non-IT managers completely independent of IT management," according to Gartner's Ben Pring, who wrote the report The Cost and Benefits of SaaS vs On-Premise Deployment recently.

Most SaaS applications can be configured using a browser, by manipulating metadata, without touching the underlying code. This means that non-technical users can customise applications, eliminating the change cycles needed by IT staff, as compared to on-premises software deployment.

But undesirable results for enterprises with a mixture of SaaS and on-premises applications may eventually create serious data integration problems. "Without the involvement of experienced IT management, enterprises may be buying the wrong software for the wrong price in the wrong way, and storing up considerable challenges [in terms of availability, security, fit within corporate architectures, policies and processes] downstream," says Pring. "[IT managers] will probably be forced to re-intervene if integration is required at a later date."

One option to integrate SaaS with on-premises applications, Pring says, is to use tools that are capable of interacting with web services.

Most SaaS vendors use web services-based applications programming interface (API), which offer more reusability of code and is easier to maintain than hand-coding interfaces. But, depending on the SaaS vendor, not all of them make the APIs publicly available. Enterprises may have to rely on the vendor's own professional services team to provide custom integration.

The earlier the better

Early involvement with IT has brought smooth integration of business processes and data for global digital marketing company Wunderman. Using Oracle Siebel's on-demand CRM, Wunderman currently relies on SaaS applications in China, Vietnam, Thailand, South Africa, and India, with plans for Malaysia and the Philippines.

"We use the marketing data as the master for customer and prospect data. And we use the analytics for database marketing activities," says Allan Crockart, database marketing director, Asia Pacific. "Oracle Siebel CRM is a platform with independent, web-based, hosted CRM that is easily deployed and simplifies the process of implementing CRM."

It is easy to implement because the application requires a very low cost of entry, notes Crockart.

"In theory, using a PC and browser, the Oracle Siebel CRM could be running in a couple of days out of the box," he says. "But we connected it to other data systems, and set up the reports to make sure it supports our business processes."

Crockart notes data integration was also set up to feed the CRM software with information from other applications, like the sales systems, website enquiries and the customer warranty registration system.

"Siebel tools allow users to use web services to tap into the Oracle data server and populate the database with data from the user's systems," he adds.

It took about three months for Wunderman to get the CRM software online at a branch office from scratch, notes Crockart.

Real-time integration

With IT's involvement, the feeding of data to SaaS applications on a real-time basis is also available for Forex Capital Markets (FXCM), a New York-based online foreign exchange trading company. Real-time data sent to the CRM application includes new marketing prospects and potential customers who have registered for practice trading accounts.

"These figures are valuable, because the sales team use information to call prospective customers immediately," says Ornit Niv, managing director of Asia regional headquarters.

He adds the application is also integrated with FXCM's sales, marketing and operations, like the creation and maintenance of new customer accounts.

"With Salesforce CRM, I can see the leads and people registering on the website for a share offering in real time. We don't have to go to the marketing department for a report which could take a week to produce. And we can change marketing strategy to respond to what is working or not," says Niv.

With a total of 600 employees, FXCM has been adopting SaaS from since 2002 to manage its 120,000 online customers. In Asia, the company started using four years ago.

Apart from feeding the CRM data, the real-time integration also provides updated reports on business performance.

"We have even integrated Salesforce with data from our trading platform, including online orders and accounts, and our back-end office system," he says. "Previously, I would have to have access to our own platform for data and reports. Now that Salesforce is integrated, customer accounts, trading history and reports are available faster and in a more flexible way."

Another common concern when integrating data with SaaS is the scalability and delay in response time. But according to Niv, it did not appear to a big challenge.

"Most of our IT resources are in the US, but it is sometimes faster to access information from than from my own corporate network," he says. "We have increased our users from six people to 100 and the response is still good, because of a robust worldwide environment with bandwidth that can be scaled easily."

From the tap

With a fast-growing and well-received market, SaaS may represent to some people the realisation of an old dream-utility computing. Since SaaS application vendors provide a complete computing environment with little need for the enterprise IT function, application features are available like utility.

To realise software as a utility, introduced, which is a multi-tenant platform as a service (PaaS). The platform enables close integration between multiple applications, allowing them to share a common security model, data model, and user interface.

Despite the push for a single vendor, a heterogeneous environment and multi-vendor approach remains users' preference. In Asia, as elsewhere, IT teams will have to deal with a mixed environment of SaaS and on-premises applications. Thus demand for data integration will not go away.

"Built on open standards and web services standards, inter-SaaS application integration is considerably easier than the integration of proprietary applications," says Pring from Gartner. "While on-premise to on-demand integration is still a challenge, the overall integration burden is considerably reduced through SaaS."

Room for growth

Software-as-a-service (SaaS) will grow seven times faster than on-premises software for the next three years, reports Gartner. By 2011, a quarter of new business software will be SaaS.

Although SaaS is booming, it doesn't work for everything yet. For example, Gartner reported that SaaS is only one or two per cent of software spending on enterprise content management (ECM).

"SaaS adoption is highest in applications that support simplified, common business processes or large, distributed virtual workforce teams," says Sharon Mertz, research director at Gartner.

What is driving the growth?

In the early days, people saw SaaS applications as a quick fix which avoided upfront software investment for small companies. Today's users, however, tell a much more positive story.

One example is Forex Capital Market (FXCM) Asia, a multinational provider of online retail foreign exchange trading, which has adopted's CRM applications. "Salesforce enables our sales team to keep track of contacts and leads and also to service existing customers," says Ornit Niv, managing director of the Asia regional headquarters. "Today, every department that uses customer information uses Salesforce, including not only marketing, but back-office units like dealing and finance."

IT shops also notice the difference that SaaS makes to maintenance needs. "Our IT staff need do very little to support Salesforce, unlike, say, our on-premises email system, which demands that our staff get professional certification from the vendor and do a lot of maintenance," he says. "The IT world will have to adapt over the next five years to a much more on-demand environment."

© Fairfax Business Media

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