The realities of SaaS are dawning

Were any proof needed that the software-as-a-service model is by now a mainstream capability, it came in early March 2009 when President Barack Obama appointed the inaugural US government CIO – arguably the top IT job in the free world.

The man Obama chose to drive the US government’s IT strategy is Vivek Kundra, formerly chief technology officer for the Mayor of Washington DC. It was in that capacity that Kundra rolled out Google’s on-demand applications suite, as well as its Google Earth application, for the District of Columbia’s employees.

“The ‘cloud computing’ model allows you to provide service, rather than technology,” Kundra said of the project before his recent appointment.

This month’s cover feature presents ten more proof points in the form of success stories from businesses who have used SaaS to pursue a number of very different strategies. Some are exploiting the web-based model to unify global processes, others are radically cutting the cost of providing IT services.

However, not everyone is convinced. A recent study by Forrester Research found that the proportion of companies considering the deployment of a SaaS application actually declined from 45% a year ago to 26% in 2009. One interpretation of those numbers might be that many organisations have now moved beyond the consideration stage and have adopted SaaS at some level.

But the data also showed that 54% of the companies polled – large and small firms in both Europe and the US> – claimed they had no interest in the model, up from 36% a year ago.

That suggests that as they have built a greater understanding of SaaS, some companies have decided that the model won’t work for them – it may be that the applications on offer today are not yet mature enough or that the total-cost-of-ownership argument does not add up. Indeed, total cost of ownership was the main concern for businesses when considering SaaS, Forrester reports.

Nevertheless, many companies are still happy to highlight the benefits and cost savings they have seen from SaaS: in the case of one of our profiles, Japan Post, the costs are a tenth of an on-premise alternative, in the CIO’s estimation.

Moreover, for many in today’s cash-strapped business environment, the ability to pay as you go for IT rather than with upfront fees will be more of a financial lure than a lower overall cost.

As our ten examples demonstrate, there are many dimensions to SaaS. The revolutionaries who heralded its arrival can no longer argue that every on-premise system will be replaced by a SaaS alternative. But nor can the naysayers ignore the real benefits to those business who have put SaaS to work for them.

Kenny MacIver

David Cliff

David Cliff is managing director of Houghton le Spring-based Gedanken, a company specialising in coaching-based support and personal development. Cliff is an experienced trainer, manager and therapist,...

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