Reading the signs for SaaS

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Given that I live and breathe SaaS and cloud computing with clients everyday, it’s sometimes easy for me to forget that this is still an emerging model in the enterprise.

CRM and now increasingly HR functions have hit the threshold of maturity where I can’t imagine a company would not at least consider using a SaaS model in these areas. We’re also seeing a whole raft of applications typically custom-developed on costly aging platforms be great candidates to shift to the cloud.

Neverthess, these areas are often a fraction of the overall systems landscape for an organisation – the case is not always clear-cut. I pondered the question raised by Andre Yee’s blog “Are All Applications Suitable For the Cloud?

I agree with his assertion that perhaps not all users or segments of users are suitable for the cloud. I’d go further to break out three different levels of criteria on suitability to the cloud: (1) Function-level, (2) Company-level and (3) Industry-level.

‘Function-level’ criteria are a combination of minimum feature-function fit to a business process and inherent constraints around a cloud solution e.g. zero tolerance for data latency, exception loads through standard APIs, etc.

The list of constraints has reduced over time. For example, ‘disconnected use’ (from the internet) is no longer as big a constraint; similarly heavy data-crunching/analytics is increasingly feasible in the cloud. Function-level criteria are objective criteria.

In contrast, ‘Company-level’ criteria are often highly subjective criteria – where different users and stakeholders hold very different opinions. How willing is a specific company to be an early-adopter of SaaS/Cloud for a particular business process?

What appetite is there to break away from a traditional ERP platform for niche requirements? Is the culture of an organisation able to deal with a more agile level of change - accepting some trade-offs and being able to iterate improvements across frequent releases?

Not surprisingly, it is at this level of criteria that many companies struggle to make decisions.

The final ‘Industry-level’ criteria take into account macro implications of a business process e.g. regulatory restrictions for HIPAA, constraints for tax auditing, etc. Of course, for some processes no matter how reliable a SaaS/Cloud service, it is purely control/recovery path that is an inhibitor – it is hard to imagine clinical systems for patient care moving to multi-tenant cloud models.

On the flip side, some industry processes are highly suited to SaaS/Cloud because of the high degree of business flux/uncertainty and market changes. For example, I witnessed this in the Pharmaceutical industry where marketing and sales processes related to primary care are going through enormous change.

Companies here are starting to leverage SaaS/Cloud to be able to better adapt to change and indeed creating a ‘learning’ environment to be able to lock down processes based on real experience.

Similarly, in industries with heavy indirect channel models, companies are starting to use SaaS as an enabler for the same reasons.

I find that by breaking out these different levels of criteria, organisations are better placed to pinpoint the real drivers and the real issues in moving to the cloud. Of course, it’s a moving target because the capabilities in this space are changing so rapidly – roadmaps now become living documents.

No one can predict the future, but setting the right ‘signposts’ for when and how to ramp up is increasingly one of the key success factors in this space. And I’m seeing many companies getting this right.

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