Is Software-as-a-Service Ready for You?

Posted by Brett Young | Tuesday, March 10, 2009 | | 0 comments »

Gartner predicts that by 2012, 20% of the commercial email market will shift from premise-based to Software-as-a-Service (SaaS). This is up from only 1% in 2007. Of course, email is only the beginning. Instant messaging/ presence, team workspace, productivity tools, and more are starting to be offered as SaaS from the likes of IBM, Microsoft, Google, and others. If you talk to the vendors, they're ready for you today. They have invested hundreds of millions of dollars into new data centers. They have tweaked their software to support an SaaS model. And, they are actively recruiting customers to make the switch from on premise to SaaS. Are you ready to go? How will you know when the timing is right?

While I am convinced that SaaS is real trend that will eventually pay-off. I'm not convinced that it is right for everyone, not yet. Beyond the hype, each SaaS opportunity must be evaluated on its ability to reduce long-term expense while sustaining quality and compliance. Every company must define what quality and compliance is for them. SaaS is not fully prepared to meet everyone's definition of quality and compliance for a price that is less that what they are paying today.

Here are five actions we can begin now to help us prepare for SaaS in the future:
  1. Transition to "Out-of-the-Box" - The reason that SaaS vendors can offer communciation and collaboration services at a lower cost than many premise-based solutions is that they can recognize massive scalability. This can only be accomplished through shared, multi-tenent infrastructures. It also assumes that all of these tenents are using the same "out-of-the-box" software. If you have customized your on premise solutions to meet your company's special business requirements, it will be difficult to upgrade, let alone migrate to SaaS. Make "out-of-the-box" a design principle going forward. It may require altering some business processes. However, it will ultimately position your company for future cost-cutting options such as SaaS.

  2. Know your cost - It is impossible to know whether SaaS provides value unless you understand your current cost structure. SaaS vendors can assist you in developing a Total Cost of Ownership (TCO) model that incorporates all of your platforms costs. Remember, that acquisition and implementation are usually a fraction of the cost of ongoing support and maintenance. As you track your costs against that of SaaS, you will be able to forecast the point at which SaaS may be viable, from a cost perspective. However, cost is only part of the consideration.
  3. Understand Your Requirements - Besides cost, you must know what requirements must be met to consider SaaS viable. Here are some questions you should ask: How will you integrate your applications? Do you need encryption? Do you need directory/security integration? How will you manage single sign-on? Do you have legal hold and discovery requirements? Do you have records retention requirements? What are your message hygiene requirements? Do you have special regulatory requirements? Are you able to use a shared infrastructure? How will you manage storage limits? What are your service level requirements? How will the support structure work? How will you coexist between on-premise and SaaS solutions? There are probably many more. Devote plenty of time to understanding the minimum requirements that SaaS must deliver to be viable.
  4. Monitor the Marketplace - The SaaS vendors will provide you with an impressive list of customers already using their services. However, you will quickly notice that there are few if any government agencies or financial services firms represented. Most of the large early adopters have been from the manufacturing industry, which is often early at realizing cost benefits. Manufacturing is also less regulated than government and finance. Keep a close eye on the marketplace and when you start to notice the regulated industries jumping aboard it will signal that SaaS vendors have reached an appropriate level of maturity for most industries.
  5. Start a Small Pilot - The best way to start to experience the benefits and drawbacks of SaaS is to start using it. Ideally you could identify a small number of people who could switch completely to a SaaS-based solution. However, there are some potential challenges for these people. For example, will they be able to access your corporate directory? Will they be able to do a free-time search? Will they be able to IM people on the on-premise platform? If the pilot people are separated too much from everyone else, they will not be able to effective evaluate it. The lessons learned around coexistance will be directly applicable to your future rollout. Coexistance may even be your long-term strategy if you opt for a hybrid approach where some users connect to premise-based services and others to SaaS solutions. You may need to do a small pilot every year to get a sense for how SaaS is evolving to meet your needs.

Although we're starting to see some companies make the leap to SaaS, it is still relatively immature. By following the guidelines above, you will be better positioned for making the SaaS decision when it truly benefits your company. For some of you, that could be many years from now.

Are you considering SaaS? What have you done to start preparing?

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