Sign up now and get the best business technology insights direct to your inbox.Susan Hall spoke with Jeff Kaplan, managing director of THINKstrategies and SaaS Showplace.
Hall: Is software-as-a-service primarily for small and medium-sized businesses or does it work for larger companies?
Kaplan: It definitely works for larger businesses and an increasing number of those larger businesses or enterprises are adopting software-as-a-service. They’ve actually been doing so for quite some time, they just haven’t been very public about it. They tend to not be very public about these things because they don’t want every vendor to come knocking on their door. And they were taking the time to test how well SaaS would meet their needs and how well it would grow, to scale to meet their requirements.
An interesting indication of the growing acceptance of SaaS: I’ve been on the advisory board of an industry event called SaaScon. We’d always intended for this to be a user-oriented event, but the first couple of years, it was tough not only to get users to talk, but even to attend. This year, we have an incredible array of high-level executives from brand-name companies who are speaking and a large number of IT and business decision-makers who are attending this event [March 26-27].
Hall: Tell me about some of the characteristics of companies that find SaaS works for them.
Kaplan: It ranges, again, from start-ups who are trying to take advantage of SaaS to fill their kind of green-field needs. They’re getting up and running, they don’t have a lot of money, and they’re looking for a pay-as-you-go solution as they begin to build their companies.
But there are also established small and mid-sized companies that are frustrated because they have limited internal staff and skills. They’re unable, possibly, to take advantage of traditional software because it’s too complex or costly for them. Or they bought that software and couldn’t take full advantage of it because they found it was too hard to wrestle into the proper shape to be used by everybody in their organization.
By the same token, a lot of large-scale companies have been frustrated because they made enormous investments in customer-relationship management or ERP or other enterprise applications and found they couldn’t deploy it because it was too complex or that it cost far more than they expected, not only to roll it out, but to keep it up and running. These companies are looking at ease of use, compressed time to value and the flexibility of the software-as-a-service alternatives. They’re saying they can more successfully meet their needs because the functionality is there, but they also are saying two other important things.
One is that a lot of organizations are highly dispersed nowadays. They’re global. It was difficult for their remote workers to access their traditional applications through a firewall or a virtual private network. It’s a lot easier for them to do so via the Web. It’s perfectly suited for them. We’ve gotten very comfortable traversing the Web through consumer-oriented services. People can’t understand why it should be so difficult with the traditional apps they've had to put up with. Now they're seeing this new generation of business apps modeled after the consumer market. With the proper security services in place, these services can help them meet their needs so they can get real-time, anytime, anywhere access. It also allows multiple users to have equal access. They can collaborate more effectively as well. Sometimes it helps them communicate better, not only internally, but also to partners or customers.
Hall: Is there really much flexibility with these services? Can you really customize services or are you buying an off-the-rack dress?
Kaplan: That's always been the knock on SaaS, that it can’t be customized. But two things have happened. One is that people have found that trying to customize traditional applications isn’t all that easy either, and that it takes a lot of money and a lot of people time to make it work. Then the onus is on you to continuously keep it up to date because the vendor won’t support that customized version.
In the SaaS market, because of the evolution of the technology, the application techniques being used, they can be reconfigured to meet the bulk of the needs of customers out there. That's become a revelation to a lot of companies. They thought they needed highly customized solutions, but they’re finding their requirements aren’t that much different from everybody else's.
Hall: So what have been the issues of companies that found SaaS really didn't meet their needs?
Kaplan: There are always companies that are concerned about security or reliability or lack of control. Those tend to be the barriers to adoption. The irony is, in many cases, these SaaS solutions are more secure because they have more controlled access to them sometimes. They can be more reliable because many enterprises can't keep their own software up and running very effectively. And control is a relative term. If control means you have to dedicate people to just keeping applications up and running, then maybe that’s not a productive way for them to spend their day. Many companies find their software-as-a-service providers do a better job of keeping the software up and running, keeping it secure and continuously enhancing it to meet the customer needs.
Hall: You've said in the past that SaaS can be more secure because you don’t have people carrying it out the door on a laptop. Can’t people just download stuff?
Kaplan: There are controls that can be put in place. You can select applications that have relatively tight controls on them to prevent that. People might have access to the data, but not necessarily the ability to download it.
And there’s an ancillary benefit that publicly traded companies are starting to realize. The offsite hosting of that data might not be a problem; it might be a solution when it comes to their disaster recovery and business continuity requirements.
For most companies, compliance means two things: They have to store the data in a secure location and they have to be able to access that archive in an effective fashion. So if you’re using Salesforce.com or any of the major online services, they’re actually helping you manage your compliance.
Hall: I read that you expect SaaS to really reach mainstream this year. Do you think companies will start to become less satisfied with it if every Tom, Dick and Harry jumps into the market?
Kaplan: That’s always a risk and that's part of the challenge – the proliferation of players. There's evidence of that in SaaSShowplace, which I created, the largest online directory of SaaS companies. It has more than 600 vendors with over 2,500 offerings across 80 categories. And that’s going to grow. In fact, I expect there’s actually twice that number out there. It represents an opportunity for a lot of companies that are frustrated with their legacy applications to take a look at the on-demand alternatives. Back then, companies had no choice but to buy [software], then try it. And try to make it successful. In many cases now, they can try before they buy, to see how they like it, then incrementally adopt it to mitigate the risk of failure.
Hall: So why is SaaS so hot right now?
Kaplan: There are three main reasons. One is the environment, the economic and competitive environment that companies have to do business in and the globalization of business.
The second is the enabling technologies that are available to us. The proliferation of broadband networks makes access to these applications easier now.
The third is the popularization of on-demand services like Amazon and YouTube and iTunes that have become second-nature to all of us in our personal lives. So stepping into our work lives is kind of like stepping back in time. You kind of wonder, “Why is this so hard?” And now there are viable alternatives that [companies] didn’t have before.
To ShareThis, click on a service below: