Software as a Service (SaaS) is often touted as the latest and greatest thing since sliced bread and the software industry is dead!
Not quite so fast!
In my own actual experiences I have found a number of truths that anybody considering SaaS may find very useful:
- It is not suitable for every kind of software - In fact, the more detached the application's functions are from the rest of the company's operations, the more suitable it is! You can use the Outsourceability Test - If a function can be easily outsourced to a third party vendor, that function can be easily done in a SaaS application. For example, Payroll services, HR services are all being outsourced by a majority of companies, even large ones! These are perfect for SaaS rollouts.
- It needs to be as integration-independent as possible - Functions within the company that depend upon many other internal systems for inputs, and from where many other systems need to get their outputs, is a bad choice for SaaS. For example, an Order Processing Module needs to talk to Sales Management, Manufacturing, Sales Accounting, Warehousing and Finance systems. Bad Choice! There will be so many interfaces between your own internal systems and this SaaS system, your head will spin!
- Data needs to be Third-Party Friendly- Government regulations regarding Privacy of Personal Information (Identity information, Credit Card Information), Medical Information (Like HIPAA rules) may all make certain kinds of data very sensitive! Try convincing these customers that they need to store them in your servers for them to use your SaaS offering! Good Luck!
- Total Cost of Ownership Profile - A Sales Force Automation SaaS offering is perfect for your 20 sales people, especially when they are scattered geographically. Using the Internet is the perfect interface for them and they might all as well use a SaaS offering! Try doing that for the 200 customer service agents in one location. Your cost profile may indicate that you are better off by buying the same software and installing it locally on your servers as a regular software product. The SaaS Cost Profile may equal or be mire than if you buy it as software and run it on your own machines!
SaaS deployments have their own headaches. If you think not having to deal with hardware and software and upgrade issues, you are right!. You just got rid of those headaches but you just might have some brand new, but different ones!
Thanks for a very useful article!