If the first wave of this year’s accelerated transition to the cloud was marked by increased reliance on software-as-a-service (SaaS) applications, the next phase – as sure as day follows night – will revolve around a concerted effort to rationalize as many of the providers of those platforms as possible.
In the rush to enable employees to work from home, many organizations adopted multiple SaaS application platforms. Most of those decisions were driven by line of business executives charged with maintaining business operations by any means possible. Now that it’s clear a large percentage of the workforce is going to be working from home more often for the foreseeable future, many organizations will soon be assessing the cost of all those SaaS platform decisions.
Each SaaS platform that is adopted winds up over time increasing the total cost of IT. Not only are there often commitments to year-long contracts that quickly add up each time there is a new user of an application, IT teams will be tasked with integrating these platforms as organizations look to craft more seamless digital business processes. The more platforms there are to integrate, the more expensive that task becomes.
Broad portfolio vendors may win out
Savvy organizations will soon be looking for SaaS application providers that provide the broadest portfolio. Naturally, not every one of the applications in those portfolios may be best of breed. However, at a time when an economic downturn is forcing organizations large and small to reduce costs it’s only a matter of time before all the money being allocated to SaaS applications will come under more intense scrutiny.
Arguably, the providers of the broadest portfolio of SaaS applications today are Microsoft and Zoho. Most recently, Zoho launched Zoho Workspace to bring together nine collaboration, productivity, and communications tools that all share a common data model. That approach not only reduces licensing costs, it also reduces the number of SaaS applications that IT organizations will have to integrate, says Taylor Backman, senior evangelist for Zoho.
The overarching goal is to reduce the friction that inevitably occurs when organizations attempt to weave applications from Microsoft, Zoom, Slack and others together, says Backman.
“As far as we’re concerned the era of the standalone SaaS application is already over,” says Backman.
As the need to integrate SaaS applications becomes more pressing it’s only a matter of time before there is a wave of merger and acquisition activity among these providers. As Microsoft and Zoho continue to expand their portfolio, rivals will eventually be forced to respond in kind. Savvy IT leaders will start considering now which providers of SaaS applications they rely on today have the financial resources needed to expand their portfolio either organically or by acquisition. In the case of an acquisition, the downside is that it always takes time for SaaS application providers to unify the application experience around a common data model.
There is always going to be some level of integration effort required to incorporate SaaS applications within a digital business process most likely using no code or low-code tools. Critical platform decisions made today, however, will determine the level of integration pain organizations experience tomorrow.