I’m finally getting around to publishing my notes from Burton Group’s Catalyst '09 conference. I had intended to live blog each session. However, for various reasons, some technical and some logistical, that just didn’t work out. Now as I comb through pages of notes I struggle with how to best publish them. I’ve decided to publish a series of brief Top 10 lists that boil down my learnings on specific topics. This is the first list and it focuses on Software-as-a-Service (SaaS):

1. Enterprise IT and the vendors are both too immature to leverage SaaS today.


2. Be strategic when planning an SaaS pilot. Focus on the “underserved” users, since SaaS functionality will be perceived as limited compared to current enterprise solutions. Email for call center employees is perceived by many companies as low risk and a good opportunity for early SaaS.


3. To prepare for SaaS, companies should be working toward making their internal services more modular, so that pieces can be easily moved to the cloud in the future. We need to really understand application interdependencies. A mature Configuration Management Databases (CMDB) will improve the likelihood of succeeding with SaaS.


4. Don’t think that issues that have challenged enterprises for decades (such as performance, availability, maintenance, capacity, etc.) just magically go away for the SaaS vendor. They have these same challenges. However, they’re success depends upon their ability to hide challenges from you, the customer. Just because the vendor isn’t talking about them doesn’t mean they’re not experiencing them. If you’re not careful you’ll just end up with the same mess you have today, just in someone else’s data center.


5. Instead of SLAs, some cloud vendors are instead opting for full discloser of availability and performance. Customers can then decide whether they can accept the risk. They can always fire the provider if requirements are not met.


6. Records management functions are not very good in current SaaS solutions.


7. SaaS has shown enterprises that there are much easier licensing models. However, venders still need to figure out how to make it easy for companies to buy on premise and hosted services with a single pricing model, and with flexibility to move users between on premise and hosted without breaking the pricing model and requiring new contract negotiations.


8. We are conditioned to do large releases that require user training. However, with SaaS expect to see releases of one or two features at a time, but on a much more frequent basis. At this rate of change, training is not necessary.


9. Businesses are still concerned about what is out of their control with SaaS. For example, there is really no case law on SaaS, making it impossible to access risk. No one wants to be the test case. Let someone else be the first.


10. Google is building a connector to Outlook, so companies can continue to use Outlook on the desktop, with Google in the cloud.

What do you think? Do you disagree with any of these assertions? How is your company approaching Software-as-a-Service?

Like a lot of people in the collaboration and communication space, I'm extremely interested in the Software as a Service (SaaS). Here are my notes from a recent Gartner webinar on SaaS and cloud computing. It was originally broadcast on May 27, 2009, from 1:00 – 2:00 p.m. EST. The presenter was Daryl C. Plummer, Managing VP & Gartner Fellow.

Cloud Computing

• Cloud computing definition: "A style of computing where scalable and elastic IT-related capabilities are provided 'as a service' to external customers using Internet Technologies"
• When you say "cloud", always include another word, like "computing", "storage", "services." "Cloud" by itself really doesn't mean anything.
• The customer doesn't have to understand how a service works. They are "abstracted from provider concerns through service interfaces."
• For the most part IT thinks they need to know how a service works, mostly because we've trained them to do that. Instead, focus on outcomes, measurements, and contracts that mitigate risk.
• Focus on the outcomes you need, not on whether or not the service included the "cloud" label or not.
• Cloud computing is a provider-consumer relationship, instead of a vendor-user relationship.

Cloud Computing models

• Acquisition model: Service – "All that matters is results. I don't care how it's done."
• Business model: Pay for use – "I don't want to own assets; I want to pay for elastic use, like a utility."
• Access Model: Internet – "I want accessibility from anywhere from any device."
• Technical Model: Scalable, elastic, sharable – "It's about economies of scale with effective and dynamic sharing."

Risks of Cloud Computing

• Availability, capacity, and performance
• Security, privacy, disaster recovery policies and procedures
• Service metrics, reporting and analysis
• E-discovery and investigations
• Data ownership, recovery, and migration
• Integration with on-premise systems
• Commitment requirements (terms, minimum use)
• Setup, training, and integration fees
• Difficult to customize
• Switching costs
• Governance of sourcing process
• Data/process location and isolation
• Regulatory requirements
• Transparency to provider operations
• Hidden supply chain impact

Common cloud computing use cases

• Prototyping/Proofs-of-Concept
• Web application serving
• Email / Collaboration
• Application appliances
• Application testing resources

Software-as-a-Service (SaaS)

• A "form" of cloud computing in almost all cases.
• SaaS is misnamed - It should be called "Application"-as-a-service, as opposed to "Software"-as-a service.
• Delivers an application based on a single set of common code in a one-to-many model.
  Uses a pay-for-use or subscription licensing model.
• Beyond simply "bleeding edge" and "good enough", it is now viable and ready for consideration.
• Almost all software vendors will have an SaaS offering

Upsides to SaaS

• Use operating budget instead of capital budget
• Only pay for what you use
• Platform homogeneity
• Lower Total Cost of Ownership(TCO) in mid-term; Long-term TCO is yet to be determined
  
• Faster implementation
• Increased innovation

Downsides to SaaS

• Governance issues
• Release management dictated by provider
• Limited 3rd party tools
• Vendor management
• Security
• Long-term TCO
• Integration between on premise and SaaS

Four things you can do today

• Savings: Compare your cost of capital expenses versus cloud services
• Portfolio: Find three workloads which you can experiment (Move workloads, not applications)
• Migrate: Move existing apps into cloud (Served from the cloud, versus cloud services)
• Use: Consider cloud email and collaboration (Get immediate feedback)

Gartner Bottom-Line Recommendation
Now is the time to consider cloud computing model for delivering services to employees, as well as customers and business partners.

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?