Intelligent Enterprise

As the number of SaaS deployments expand worldwide, many analysts forecast a strong upward trend in outsourced applications. Indeed, by 2011, research firm Gartner claims that 25 percent of new business software will be delivered as SaaS.

Clearly, this seems to be the trend. As cost pressures come down on management, the use of SaaS will become more commonplace. In other words, it's not something that's just in style, but something that can quickly show an improvement on the bottom line when considering the cost of implementation and maintenance, as well as the value of the business processes it provides. Few companies have the resources to recreate or even compete with SaaS products such as Saleforce.com, NetSuite, and/or the emerging Web services marketplaces. And why should they when SaaS products are a fraction of the price of purchasing complete packages or building those services yourself?

While SaaS is always cheaper, that does not mean it's always the right solution. However, in the world of Enterprise Incentive Management (EIM), SaaS seems to be a good idea. According to Jeffrey Saling in this CRM Buyer article:

"SaaS suits EIM for three important reasons. EIM systems management is usually outside an organization's core competencies. Business Week Online recently published a commentary on the myths of SaaS, indicating that 'today's economic and competitive pressures make nearly any form of outsourcing fair game. Many companies now consider various IT functions and business applications commodities and not core competencies. This has made SaaS, essentially an outsourced application management business, more attractive today than ASPs (application service provider) and hosting services of the past.'"

Saling goes on to state other advantages of SaaS and EIM, such as the fact that EIM does not require on-site deployment because it operates effectively outside a corporation's walls. SaaS efficiently manages well-defined tasks and business processes that can be performed externally and integrated into the enterprise. Also, to the business issues, EIM's purpose is positively impacting the bottom line.

"Software as a Service is starting to gain favor for several reasons: It's relatively easy and inexpensive to implement; it's flexible; it doesn't require as much infrastructure; and its costs are more predictable," according to Saling.

So, what does this all mean? It's really a matter of understanding your own issues and then considering SaaS as a part of the potential solutions. I recommend that you consider the following:

First, considering the ability to scale, and how SaaS meshes into your existing security model. Many don't consider scalability or performance, and they do so at the expense of the end user.

Second, make sure you consider the target end-user, including where they will typically use the SaaS-delivered application.

Third, how much is the transition cost from one platform to another? While most will tell you it's a simple process, migrating data from one platform to another is typically complex.

Finally, assess the ROI in real, not hyped dollars. While SaaS is almost always less expensive, you need to make sure to factor in maintenance costs, integration costs and other costs that are typically off the radar screen when selecting a SaaS vendors.

Application integration and service oriented architecture expert David Linthicum heads the product development, implementation and strategy consulting firm The Linthicum Group. Write him at david@linthicumgroup.com.