Against a backdrop of increasing focus on Cloud Computing, I was surprised to see the recently published headline “Gartner finds lukewarm reception to SaaS.” The Gartner report was based upon a survey completed across 333 companies in the US and UK in December 2008.
Digging into the report highlighted some intriguing results. The participants who considered SaaS but decided against it, cited high cost of services (42%), difficulty with integration (38%) and failure to meet technical requirements (33%) as the top 3 factors.
I sometimes hear these objections when talking to clients about SaaS, but they are often based on perception vs actual evidence. For example, on the topic of integration with SaaS, our common experience shows no additional difficulty when compared to on-premise integration.
Indeed, some integrations are far simpler. The difficulty often relates to questions around master data management which largely remain the same regardless of SaaS being in the mix. Of course, there are exceptions, (eg for high volume transactions) but even in these cases, we typically find acceptable approaches to meet the key requirements.
The results would appear to show that these types of customer concerns are frequently alleviated once they actually try implementing SaaS. In the Gartner study, only 10% of those already using SaaS, said that they would stop or reduce their service over the next 2 years. Indeed, almost a third indicated that they would increase their use of SaaS.
Of course it’s not all rosy for current users. The report includes customer satisfaction scores which the authors call ‘underwhelming’ – on average 4.74 out of a 7-point scale. The authors conclude that hesitation on the ‘true cost’ of SaaS solutions is a key factor.
Certainly I can understand the focus on cost, particularly given the current economic climate. In my view, in addition to cost, it is quantified value that is equally important to drive up satisfaction.
I’m a believer in SaaS. I see it having a profound impact to drive real business value. In several areas today, SaaS models are fundamentally faster to implement, less expensive and often provide higher quality solutions than their on-premise equivalent. Also, the agile/adaptive capabilities that SaaS solutions offer are extremely attractive given the level and pace of change in many organizations today.
I see two broad types of SaaS capabilities. In some business processes, the SaaS components are truly becoming ‘plug-n-play’ and value is easily attained (e.g., evolutionary credit vetting services, automated sales intelligence, etc.).
Companies should seek to fully exploit such SaaS services as more come on-stream . In other processes, the SaaS services are not self-adopting and the SaaS tool alone can lead to an ‘underwhelming’ experience. In these instances, a more holistic approach is needed to integrate with legacy systems and to drive business process change. Also, the use of agile approaches aligned with business metrics is providing more opportunities to optimize business processes in production.
In this way, both types of SaaS capabilities, are creating entirely new possibilities for companies to create enormous business value in ways that were just not possible with on-premise tools. In my view, the key thing is to get started.