Success as a service

As they survey their long, whirring corridors of servers and storage systems, and their mounting pile of service bills, IT executives could be forgiven for wondering what ever happened to the software revolution that promised to take all this off their hands.

While many businesses already make use of some software-as-a-service (SaaS), the move to on-demand software has yet to catch fire, let alone make a significant dent in packaged software inventories.

But, as the ten examples of SaaS success shown here demonstrate, the benefits are real – and on-demand application options varied. Whether it’s an electronics distributor unifying its global sales processes or a US commercial bank slashing the cost of IT service management, businesses are really enjoying the flexibility, the scalability and above all the low barrier to entry that SaaS’s proponents promised them.

If there are common characteristics of the use cases presented below, it is that they are often deployments that span the globe (like GE’s supplier management system or Chiquita’s human capital management deployment) without costing the earth.

Many of them involve systems with very large numbers of non-technical users; Roche’s recruitment platform is a good example But there are also cases of highly specialised applications such as the one used by Russian oil giant TNK-BP.

So what is holding back the SaaS revolution? And why can most executives only name a handful of vendors –, Google Apps, perhaps NetSuite – as enterprise service providers?

Gartner analyst Robert DeSisto recently identified and addressed some common assumptions about SaaS.

Some of those assumptions flatter the model. For example, it is commonly believed that a SaaS deployment will necessarily be a cheaper option. DeSisto asserts that this may be true of the first two years’ exploitation, but on an ongoing basis the comparative cost of on-demand and on-premise can level out.

Similarly, it is assumed that SaaS will be quicker to deploy. This may be true of the simpler applications, says DeSisto, but more complex offerings are emerging that will take longer to adopt.

Other assumptions, though, do SaaS a disservice. It is often thought, DeSisto says, that SaaS applications are impossible to integrate with existing services. As examples including AMO’s use of Concur’s expense management system demonstrate (see page 18) this is simply not the case.

And SaaS is often seen as useful only for simple applications; Japan Post’s deployment of its own custom systems challenges that dogma.

Beside public perception, another drag on SaaS adoption concerns the difficulty that traditional software vendors face when attempting to switch to on-demand model or blend both old and new models. Let alone the fact that it involves a complete redesign of their business model, from upfront software licence sales to subscription service payments, the technical complexities are proving restrictive. In January 2009, for example, finance software giant Sage suspended its on-demand offering less than a month after launch following “severe security difficulties”.

But the move to on-demand IT marches on, whether or not all players can keep pace. Cloud computing, where utility computing resources are provisioned via a nebulous mix of flexible, on-demand application, platform and storage services, has the industry’s weight behind it.  As these ten examples prove, that expansion of the on-demand agenda can only be good news for businesses.

Click each company name to read more.

Japan Post supports 65,000-user custom application 
Software-as-a-service Santander Consumer Finance
SaaS cuts cost of IT service management at US bank
Software as a ServiceRoche
Pharmaceutical giant rationalises its web recruitment
Software as a ServiceACAL Technology
Components distributor unified its global sales operation
Software as a ServiceOsborne Clarke
Law firm’s email headaches relieved by SaaS
enterprise 2.0Abbott Medical Optics
Eye surgery equipment maker gains visibility into expenses

Technology giant exerts control over global supplier information
Fruit distributor deploys SaaS to manage global human resources processes
Software-as-a-serviceThomas Cook
Travel operator builds customer service knowledge bank on SaaS
Software as a ServiceTNK-BP
Russian oil company leverages SaaS to manage risk

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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