"Offloading Responsibility Remains Biggest SaaS Myth"

With SaaS being a buzzword in today’s enterprise environment, R “Ray” Wang, principal analyst, Enterprise Applications and Strategy, Forrester Research, gives Biztech2.0 the lowdown on the pain-points and key issues surrounding the delivery channel.

Is a SaaS implementation as simple as the conceptual view?

Yes, what SaaS has done is shift the market and buying behaviour. Instead of the IT department making decisions, the business side of the organisation can make technology decisions and SaaS allows them to deploy solution quickly. Thus it gives business users more control over the technology aspect of the organisation and reduces the use of capital expense, making use of operational expense instead. It also enables organisations to deploy solutions that are capable of being up and running in two or three days and at approximately $50 per user per month, it becomes quite simple from a selling perspective.

Does offloading applications means offloading responsibility?

No, actually offloading responsibility is the biggest myth where SaaS is concerned. A lot of business users have made the mistake of purchasing CRM, Human Resources and ERP SaaS applications without understanding the integration requirements that tie back to the IT department. Thus you end up with a lot of corporate data sitting in the SaaS environment that needs to sync with the enterprise’s on-premise IT environment. The level of complexity involved in this synching is of utmost importance.

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

If you have a SaaS offering deployed, you may not need the IT support staff in-house, which is generally the heavy burden that enterprises are looking to lighten. However, the SaaS offering is still going to require business level support.

What are the key elements that CIOs should look at when evaluating a SaaS vendor?

The key points that a CIO should consider when evaluating a prospective SaaS vendor include the following. The first point of contention is the financial viability of the SaaS vendor. The second being the vendor’s ability to handle customisations and configurations, so that the organisation gets as much flexibility out of the application to suit it’s business needs. An important aspect is the richness of the configuration tools. To make changes to the application you need metadata level configuration capabilities to align the features of the software with your business processes, which is critical. The reason that Salesforce.com and NetSuite have done well is that they have made their tools rich enough to make configuration changes. Another aspect of evaluation involves understanding the intricacies of the long-term cost structure.

What are some of the issues that enterprises have when deploying SaaS offerings?

The issues revolve around the areas of integration, security, Total Cost of Ownership (TCO), data residing on third party servers and customisation of solutions. What I have seen in the market though is that those concerns aren’t true anymore. These were mostly myths surrounding SaaS in the past and most vendors today have overcome these problems with adjustments to integration, security and pricing. What we have also seen is that TCO calculations are cheaper for all sizes of companies, when they deploy a SaaS solution.

Is it better to retain your mission critical applications in-house?

Apart from just commodity applications, increasing strategic applications are being deployed via the SaaS model. Strategic sourcing, talent recruitment and incentive compensation are not commodity applications by a long shot, but are important, mission critical applications that help change the way a business functions. We are also seeing email applications becoming very useful. There is a large email provider who will be announcing a deal with a large system integrator to provide the kind of solution in the next few weeks.

What about the quality of software design?

It is extremely important to have good quality and design in a SaaS environment. What multi-tenancy does is replicate any error across every single customer. Unlike on-demand or multi-instance applications, which are software virtualisations, you have to get it right the first time in Software-as-a-Service.