"Not All SaaS Is Created Equal"

As the Software-as-a-Service market continues to get flooded with newer offerings, customers need to exercise caution in choosing SaaS solutions.

Robert Bois, research director, AMR Research talks to Biztech2 about Software-as-a-Service (SaaS) and shares his views on the best ways to evaluate and manage SaaS implementations.

Is SaaS really as simple as it sounds at a conceptual level? Does it actually mean less work and fewer responsibilities for the users?

The answer to this question often varies by complexity and company size. For relatively small companies with a few dozen users and little to no integration to back-end applications, SaaS provides a huge time and administrative savings over traditional applications. There is virtually no IT involvement required. However, there may still be some training, setup, and light customisation done in these cases. For larger enterprise deployments with hundreds or even thousands of users, the initial IT burden of staging hardware, application servers, databases, etc. is all removed from the equation. However, there is usually still integration to ERP or financials, business process modelling, training, and customisation that needs to be done.

What are the some of the key criteria users should employ when they evaluate SaaS vendors?

Not all SaaS is created equal. There are many traditional software companies hosting their applications and calling it OnDemand or SaaS. Ensure there are no hidden up-front “setup” costs, or license fees. If so, it’s not true SaaS. Also, be aware that providers are likely to offer better pricing for multi-year commitments, much like a cell phone provider. Also look for a vendor that offers good integration and configuration/customisation capabilities. More advanced SaaS vendors even have scripting languages for inserting custom business logic, or workflow, as well as test and training environments. Many SaaS still don’t offer explicit service level agreements, so either have one added to the contract, or at least get a firm understanding of planned down-time or maintenance windows.

More from Biztech

Future Group - Reliance Retail Deal approved by CCI RBI ban on cryptocurrencies takes effect; prohibition could force investors to tap the black market

Do you think that SaaS works the best with commodity apps such as CRM, HR, Finance etc and it’s better to retain your mission-critical applications in-house?

The greatest limitation to SaaS at this point is integration. While many companies are integrating to multiple on-premises or even other SaaS applications, if high-volume real-time integration is required, there will always be a higher degree of latency with SaaS than integrations done exclusively behind the firewall. Beyond that, there are no technical limitations that would preclude SaaS from providing just as good a business application as on-premises. Many companies do view CRM, accounting, and HR as strategic differentiators, and rely on SaaS for those needs.

Is quality of software design more important in SaaS than in an on-premise implementation?

Yes. The quality of the underlying architecture is more critical for SaaS, since it needs to be designed to scale rapidly while ensuring good service levels. Part of this is actually more due to perception than reality. For example if a SaaS system slows due to increased loads, every customer is aware of the problem at the same time, which garners more attention. Users of traditional software are more likely to blame their own IT departments for slow response times even if the fault lies within the design of the software. On the other hand, SaaS vendors have largely begun putting out quarterly updates to their software, so they can more rapidly get new features, functions, or bug fixes out to their customers than traditional software. So in some sense, on-premises software vendors have more pressure to “get it right” the first time, since customers may not upgrade their software for a number of years, as opposed to months.