Issues to Weigh When Deciding If SaaS Works for You

Loraine Lawson

It's hard to get a handle on SaaS and whether it's a smart move.

 

On the one hand, you've got people like Harry Debes, CEO of the ERP provider, Lawson Software, claiming that SaaS is doomed to collapse within two years. Debes recently issued this dire warning in a ZDNet Asia interview:

"This 'on demand,' SaaS phenomenon is something I've lived through three times in my career now. The first time, it was called 'service bureaus.' The second time, it was 'application service providers,' and now it's called SaaS. But it's pretty much the same thing. And my prediction is that it'll go the same way as the other two have gone -- nowhere."

On the other hand, you've got SaaS-happy customers like Doug Harr, CIO of open source database vendor Ingres, who was recently featured in an August CIO.com article. Ingres has added 10 SaaS apps internally in the past two and a half years. Ask Harr, and SaaS is all good:

"When we started, we raised some eyebrows and drew a few chuckles But [SaaS] has worked and saved money. The on-premise model really is dead and it's the wrong direction to go."

And right in the thick of the debate is the integration question. Does SaaS cause integration problems? Is SaaS integration easier or harder? Again, it depends on whom you ask.

 

There are also plenty of customers struggling with SaaS integration, as I've pointed out previously.

 

Some have argued that you'd face the same integration problems if you had an on-site solution, but something Joe McKendrick mentioned in a recent Informatica Perspectives post made me think SaaS could be generating more integration work for IT. Wrote McKendrick:

"One of the challenges with cloud computing is that applications and services are now easily accessible to business end-users, who can acquire these capabilities without input from their IT or data management teams. This inevitably requires integration work after the fact, particularly as cloud applications move closer to mission-critical needs."

He also pointed out that SaaS integrations can be complicated by other, related problems, such as data replication, outages and the hassles of outsourced data storage.

 

Then again, Harr said easier integration is a key selling point for SaaS. Harr told CIO.com:

"Good SaaS companies have built their apps on a Web-services based architecture. It's less proprietary, and as such it's easier for SaaS apps to share data with one another."

Sounds good. Except when those standards could inadvertently create security problems. In a recent CIO.com column, chief architect Mike Kavis wrote:

"While these standards make it easier for companies to integrate services, it also could give the keys to the kingdom away to hackers if the proper security is not in place."

And, of course, there are other, non-integration concerns about SaaS. IT Business Edge's Ann All recently wrote about the shortcomings some companies have encountered with SaaS CRM. For instance, larger companies are finding that it doesn't meet their needs as well as a custom-built system, and - here's the clincher - it may cost you more when it's deployed at the enterprise level.

 

Nothing's ever easy, is it?

 

This is the part where I'm supposed to help you cut through the hoopla. Honestly, from what I've read, this is one of those many issues where there's no clear answer and you're going to have to come to a decision based on your own needs, abilities and business requirements.

 

However, there are a few issues everybody should keep in mind:

 

SaaS is not a "get out of integration jail" free card. You're still responsible for making sure data is where it needs to be, whether that's onsite or in a cloud. Heed the words of Chris Boorman, chief marketing officer with Informatica:

"You must never, ever, absolve responsibility for the quality and the ownership of the data, and having such quality and ownership as part of your core business processes. And that requires integration."

While integration can be a problem, there are options beyond custom coding. CastIron offers an appliance that supports SaaS integration and there's a growing field of third-party integration providers, particularly for SaaS CRM.

 

SaaS doesn't get you out of security, either. Make sure you're not violating any compliance concerns and that your data's safe. Kavis' column offers specific recommendations.

 

Don't assume SaaS will save you money. If you're a small business or just need a department deployment, definitely check out SaaS. If you're looking for a larger deployment, look carefully at the cost issues raised by Debes and in All's recent post.

 

If you're a business user, keep IT in the loop. You could be sending information out the door that onsite applications need or you could be putting corporate information at risk.

 

If you're in IT, stay in the loop. Business users could be using SaaS and not telling you which, as we all know by now, is a recipe for trouble.



Add Comment      Leave a comment on this blog post
Sep 5, 2008 3:21 AM Ranjit Nayak Ranjit Nayak  says:
The checklist here is very useful from a decision maker's perspective. I would add one more point at the very top which is "when" to consider"SaaS" in the first place. The question to is whether it makes sense to even outsource a business process (i.e. use an external service provider). If an IT service is core to company's existence and gives a competitive advantage, using SaaS would be a mistake. On the other hand, if the business process is routine, not a competitive advantage and can be done efficiently by an external provider, SaaS is the way to go. Reply
Sep 10, 2008 2:32 AM Steve Gonzalez Steve Gonzalez  says:
Lawson writes that SaaS is one of those many issues where theres no clear answer and youre going to have to come to a decision based on your own needs, abilities and business requirements. Thats true, but it also seems that that shes saying something Ive been thinking for a while now: That SaaS doesnt make sense for enterprises. Not only is it expensive to scale (as Debes stated on ZDNet), but it places customers data at risk. To my mind, that last issue is a big, scary question mark for enterprise players considering SaaS vendorsAgile Methodology Reply
Sep 30, 2008 1:24 AM Ramesh Rajmaghi Ramesh Rajmaghi  says:
hi i am Ramesh from kathmandu Nepal i want to see all friend of website i want to send many comments Reply
Nov 6, 2008 3:42 AM Siddhartha Siddhartha  says:
Respected Sir, E- SaaS has been recently implemented in DHVBNL ,Haryana ( Power Sector) .This has been used to integrate the voice of the customer , for both to and fro of comunications cum transactions and exchange of ideas through virtual links. I hope that the 9th Global major gaint Power Generator , NTPC , must also incorporate the same . NTPC has put up his right foot in all power and its ancilliary sectors with global presence too adding feathers in its cap.NTPC , can help these virtual real time information sharing systems to integrate the feedback of tough, critical and soseems inaccessible zones ,like breakage of transmission chord at the mid-way of the journey , to the nearest booster /sub-stations. NTPC , which is the best power generator can add and cherish these features ,to add a new pie in its potential. Reply
Dec 31, 2008 2:04 AM Eric Kimberling Eric Kimberling  says:
I agree that while SaaS may be a viable option for SMBs because of it's lower up-front cost, it often ends up being more complex, cumbersome, inflexible, and costly for larger organizations. We always advise our clients to consider SaaS options as part of their ERP evaluation process. However, many large companies are not ready to give up the flexibility and potentially lower ongoing costs of on-premise ERP. In either case, companies need to make sure they can justify the investment of whichever path they choose. Eric Kimberling Panorama Consulting Groupwww.panorama-consulting.com Reply

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