Is software as a service growing?

Jodie Humphries

As any business knows, software as a service (SaaS) is a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over a network, typically the internet. It is deployed to run behind a firewall in your local area or personal computer. SaaS was initially widely deployed for sales force automation and Customer Relationship Management (CRM). Now, it has become commonplace for many businesses tasks, including computerised billing, invoicing, human resource management, and service desk management.

Benefits of the SaaS model include:

• Easier administration

• Automatic updates and patch management

• Compatibility: All users will have the same version of software.

• Easier collaboration, for the same reason

• Global accessibility.

An increasing number of companies and organisations are moving their services to software as a service provider. Protecting business-critical information that is located in the 'cloud' requires both secure log-in procedures and an efficient user-administration.

In 2009, Gartner predicted that 20 percent of the commercial email market will be using SaaS by 2012. By comparison, in 2007, SaaS represented one percent of the commercial email market. But according to new research by Gartner, software as a service will have a role in enterprise systems, but will not take the dominant place many thought it would.

Gartner said that organisations will have to reassess their software needs in light of the "current promises delivered on by Saas."

"SaaS within enterprise applications represented 3.4 percent of total enterprise spending in 2009, slightly up from 2008 at 2.8 percent," said David Cearley, a vice president and fellow at Gartner. Gartner predicts that the global enterprise applications software market will reach US$8.8 billion in 2010.

From a market perspective, most spending on SaaS is occurring in content, collaboration and communication and the customer relationship management markets. Collectively, they represented 65 percent of the global enterprise applications software market in 2009.

Gartner said that SaaS will likely penetrate every company at one level or another and recommends that organisations consider four steps when evaluating SaaS:

• Determine Value:

SaaS is not a panacea, and companies need to evaluate and understand the trade-offs that SaaS presents. While it limits infrastructure overheads and management, and lowers short- to medium-term total cost of ownership, third-party application tools are limited and SaaS applications cannot be counted as assets on a balance sheet.

• Develop Governance

The next step is to develop a SaaS policy and governance document. This document should be a collaborative effort between the business and IT to create internal and external SaaS governance model.

• Evaluate Vendors

Organisations need to evaluate SaaS vendors for specific application needs as applicable. A vendor's commitment to SaaS is not just measured in business performance, but in technical considerations, such as operations management capabilities.

• Develop an Integration Road Map

This step will be a continuous process of developing an integration road map on how SaaS applications will integrate with on-premises applications and other SaaS solutions deployed.
However, many of the bad practices that enterprises sought to avoid by moving to the cloud are now apparent in the hosted equivalent, particularly in the area of "shelfware".

SaaS has re-energised the market

Cearley conceded, however, that SaaS had re-energised the software market, and had granted enterprise users an extra choice.

But companies must pay due care and attention to the provider they work with, warned Cearley. "SaaS changes the role of IT from implementing its own operations to inspecting a vendor's operations," he said.

Firms should determine what value they get from a hosted software service, such as SaaS.

Other recommendations include an internal SaaS policy and governance document to help companies better understand and monitor their provider's performance.

Gartner also said that SaaS should be considered as part of an integration roadmap that integrates with on-premise and other comparable systems.

SaaS integration for Coca-Cola Enterprises

Coca-Cola Enterprises (CCE) is the biggest marketer, producer and distributor of Cola-Cola products in the world, serving 419 million consumers with 200 different products. CCE, which is 35 percent owned by the Coca-Cola company, recorded revenues of €14 billion in 2008 and boasts 72,000 staff across 430 facilities. More than half this workforce is mobile - truck drivers behind the wheels of 55,000 vehicles and people constantly replenishing 2.4 million coolers, vending machines and drinks dispensers.

With such a dispersed global workforce, one of Esat Sezer, CIO of Coca-Cola Enterprises', most prominent projects has been to unify the workforce by implementing improved communication and collaboration between employees, particularly those managing day-to-day operations, and boosting productivity.

The business also needed a centralised platform on which to promote company initiatives and deliver video and audio messages. So CCE partnered with Microsoft to roll out a software as a service communications platform - a boon for employees in the manufacturing facilities who had limited access to the corporate network and those out in the field who lacked access to the company's email and content. The new software has meant a significant reduction in travel expenses with the use of online meeting tools and collaborative platforms that span time zones and locations.

Sezer said the task ahead at the time was huge but in just nine months all 72,000 users were transitioned into the 'cloud' with email and IM. The tech chief has attempted several large-scale corporate initiatives in the past but this SaaS solution produced a "wow factor".

"It exceeded my expectations, especially from an ease of use standpoint and speed of adoption of the user community, quite honestly. We have a big mobile workforce that is on the street every day but we had very limited connectivity with this mobile workforce as well as our white-collar workforce. The speed and pace with which we achieved this created a wow factor for me. From the business standpoint, how we came to the conclusion to drive this communication collaboration capability in the cloud was a result of a pretty comprehensive executive communication strategy that we developed," he said.

Related News:

Collaboration tools recognised as important |SOA can be viewed as a management tool |Maintaining business continuity as data centres transform |Improving information quality, minimizing risks