New Report Shows Integration, Deployment Speed Key SaaS Factors

Loraine Lawson

Integration and speedy deployment are the key factors companies consider when selecting a SaaS provider, according to a study released this week by McKinsey & Company.

 

McKinsey, in collaboration with the SandHill Group, surveyed more than 850 enterprise software customers about their opinion and use of SaaS. It found "a smooth path to integration with existing applications and IT infrastructure" and speed of deployment were named as the most important criteria, beating out the vendor's track record in SaaS and costs.

 

I found this study via a recent post on Nicholas Carr's Rough Type blog. Carr doesn't speak specifically to the integration portion of the study, but he does provide a nice synopsis of the key points, if you're unable to read the full 19-page report yourself. Certainly the report's finding that 74 percent of enterprise customers are inclined to adopt a SaaS platform seems to support Carr's career thesis, which is that IT will become a utility.

 

The survey does show that small and mid-sized firms are more interested in SaaS, but there's growing interest among large companies as well:

"The momentum toward adoption of SaaS platforms is surprising. Nearly three-quarters of the companies surveyed prefer to adopt platforms in at least one of the three archetypes we identify here. For platform vendors, the only falloff in interest comes at the largest enterprises, those employing more than 25,000 people."

The real question, as Forrester Research's James Staten recently pointed out, is not whether enterprises are ready for SaaS, but whether cloud computing and SaaS are ready for the enterprise.

A few other items in the report caught my eye. Yesterday, I shared how some are uncomfortable with the ambivalence of the term "cloud computing" as opposed to SaaS and thought each term could use more defining. As it turned out, McKinsey used a more precise definition for these terms in its study.

McKinsey notes there's an increase in the number of SaaS platforms -- and it divides those platforms into three "archetypes":

  1. Delivery platforms. This term encompasses both managed hosting and cloud computing. Cloud computing is a subset of SaaS and defined as "a model where a vendor provides on-demand access to infrastructure capacity over the cloud."
  2. Development platforms. Vendors provide all or some of the integrated developer environment (IDE) tools needed for creating an application online, plus hosting.
  3. Application-led platforms. These SaaS providers start out by delivering a business application, but evolve to offer a separate platform. Examples are Salesforce.com and NetSuite.

The study also showed that most of those surveyed believe the software industry is experiencing a wave of innovation, with 62 percent agreeing with the statement, "The software industry technology innovations of the past 2-3 years are nothing compared to new technologies we're about to see."


 

What seems to be driving this optimism about software are SaaS and SOA, which respondents said are the most important trends in software at this time. Thus far, SaaS and SOA have been on parallel development paths, but the report predicts the two will converge in the future. That seems a safe bet. Certainly, SaaS providers haven't been shy about using SOA in their marketing.

 

It's easy to see why companies are getting excited about SaaS. After all, providers can have you up and running in no time at all, as compared to typical enterprise software installations. And they promise to solve at least some of your integration problems.

 

Certainly, there are impressive SaaS success stories -- including Douglas Menefee, the CIO who outsourced more than half of the IT functions of a Louisiana-based emergency medical practice management firm.

 

But as with all new things, moderation, caution and planning are key. I think fellow IT Business Edge blogger Arthur Cole put it best in this recent post on cloud computing:

"Like most new technologies, there is a tendency to view the cloud as an all-or-nothing proposition: Either it will take over the IT industry or fizzle into obscurity. While the latter happens quite often, the former is exceedingly rare. At the moment, at least, it seems the cloud will serve as one of many options as the enterprise searches for new ways of doing business."


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Add Comment      Leave a comment on this blog post

May 6, 2008 6:35 AM Randall Randall  says:
I highly doubt it will fizzle into obscurity. Eventually hardware providers like Dell and HP will start selling plug and play servers preconfigured for the cloud infrastructure. Clouds will begin to proliferate, not only on the internet, but behind firewalls as well. Innovations are moving toward easier, cheaper, and faster -- cloud computing meets all three criteria.Ultimately, all hardware will participate as a node in a global infrastructure and applications will distribute themselves dynamically across nodes to bring computing power closest to the end user. Not just grid clusters, but cell phones and even vehicles.Imagine a CDN for applications. All data centers will be plugged in to the grid, even individual homes will participate, selling computing power back into the grid the way those with wind mills in their hards and solar panels on their roofs sell power. Reply
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