"SLAs are always tricky, but we've been very happy with the work we've done with them," he said. "Our SaaS vendors have got an army of database and network admins and gobs of bandwidth and redundancy and those types of things inside of those applications. We let them focus on that and we focus on how to take the applications and platform and better apply them to our business environment."
About two and a half years ago, Menefee signed up for hosted applications from Salesforce.com, PeopleSoft and Peake Software, and secured SLAs from each vendor, which he calls a key step when adopting SaaS products.
"Usually, the core thing I'm looking for in any agreement with a hosted solution is uptime guarantees, business continuity, such as disaster failover if they have an outage, data protection inside of the system and response time to issues with customer support," Menefee said.
And because as a health-care company The Schumacher Group has to comply with data privacy, protection and retention regulations, Menefee's SLAs with his SaaS vendors also require regulatory compliance. He estimates that his SLA with Salesforce.com is about 75 percent the vendor's standard agreement and 25 percent customised requirements from The Schumacher Group.
Because there are many moving parts - and therefore many possible causes for performance problems - in SaaS suites, Menefee recommends having an IT group in charge of troubleshooting. For example, a hosted application might malfunction for reasons not related to the SaaS vendor. The problem could be in a user's PC, the company network, the ISP's (Internet service provider's) infrastructure or in the Internet's infrastructure itself.
Menefee also recommends requiring that the vendor provide regular reports on their service delivery. "When you're looking at the service-level guarantees, you really want some type of report that comes back to you about what their service level was. You want to have your own internal monitoring processes put into place. You also want an action plan if there's an outage for business continuity," Menefee said.
Fortunately, The Schumacher Group hasn't experienced any serious performance or availability issues with its SaaS products. On the contrary: "The performance and uptime of our hosted solutions are much higher than our on-premise solutions," he says.
Still, having the SLAs is a must, in case something goes wrong. After all, its hosted software is used for critical functions at the company, which provides emergency medical staff and management services to hospitals.
With Salesforce.com's Unlimited Edition, about 250 employees ranging from data entry staffers to senior executives perform a wide variety of business functions. Salesforce.com's suite is also integrated with other software platforms, including the other two hosted ones: Peake Software's Tangier schedule manager and Oracle's PeopleSoft.
Of course, companies must evaluate what software makes sense for them to access on a hosted model. The Schumacher Group has its share of applications that live in its servers, although some of them could be hosted. For example, the company has on its premises GE HealthCare's billing Centricity Business because it is heavily integrated with other applications and when it was bought, Menefee didn't consider that the GE datacentre was designed to give the application a lot of third-party connections.
Likewise, Hyland Software's OnBase document management software is also offered on a hosted model, but The Schumacher Group pushes such a heavy volume of images through it that it would encounter bandwidth constraints if it wasn't installed in-house, Menefee said.
The company also has in-house an array of Microsoft server software, including Exchange, which is offered as a hosting service by Microsoft partners, but it was already installed on premise when Menefee arrived and he figures it would be more costly to switch to a hosted version.
Then there is hosted software he wouldn't consider because vendors can't offer the guarantees and the compliance and auditing requirements of The Schumacher Group.
Overall, he has been able to sign SLAs that meet all of his requirements. "I'm extremely satisfied. We've had great success leveraging them to our advantage. There are disadvantages associated with the hosted environments but we've leveraged more advantages than disadvantages."