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After announcing plans to offer three solutions in SaaS delivery format, Silicon Valley-based Serena Software says it is also committed to using SaaS internally whenever it makes sense -- and the company has already gone a long way toward that goal. Rene Bonvanie, a senior vice president with Serena, joined me for a conversation about the company's internal SaaS use and why SaaS is as good for the enterprise as it is for SMBs.

Remember that if you are interested in SaaS or other Web 2.0 subjects, you should sign up for ebizQ's SOA and Web 2.0 roundtable discussion, scheduled for March 19.

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KD: I'm ebizQ's Krissi Danielsson. Software as a Service, a.k.a. SaaS, is obviously gaining traction in the marketplace. A lot of the buzz about SaaS tends to center around how well it works from small to mid-sized businesses, but more and more enterprises are also finding benefits in using a SaaS approach. One of those enterprises is Serena Software, a Silicon Valley company that makes application lifestyle management tools for the enterprise.

Here today is Rene Bonvanie, senior vice present with Serena Software, to discuss how Serena uses SaaS internally. Now Rene, let me me start by asking...can you tell me the rationale behind Serena's decision to use a SaaS directed approach internally?

RB: Well, the question is answered in two different ways. The first way I would answer the question has to do with the economic rationale of why to use SaaS. Serena is now is a company that does roughly $300 million in revenue and it has about 800 employees throughout the world. And at that size, it is not the best thing to actually run a -- an IT department that has all of the knowledge necessary to run an operation this size.

So we’re a typical, I would mid-sized company that has all the complexities of having to manage a lot of locations, and a lot employees, and a lot of processes, and yet we don’t have really the funds to do that. We also have, I think, a complexity in our business that has to deal with as a global nature of what we do and therefore, when we do business in Europe or in Asia or in North America, it -- it is necessary to have everything and everyone connected to -- to do that so the systems need to speak with each other and -- and moreover they need to be available 24/7.

Now if you think about that, and we’re not very unique in that, SaaS becomes interesting from an economic perspective because it gives us Software-as-a-Service that is good enough for a company our size, has the functionality and the accessibility that we need, has the availability that we need. It’s up 24/7; it’s something that runs in highly well-managed and data centers and so forth. So all the things that we couldn’t possibly afford as a company ourselves are made available in SaaS.

Now, the second way to answer the question has more to do with a firm belief that we have at Serena that everything will end up in the cloud, so to speak, in SaaS. Now, that partially reflects, of course, on what we are doing but we see an industry that everything is moving into a SaaS model. Why?

Well, because you look in the past of where every kind of business process or every kind of technology has ended up. It has always ended up in very large shared models, whether it’s telephony, whether it’s electricity or gas, it’s everything moved into a grid of some sort and into a shared model. That is because the economics were better, the quality of service is better, and the connectivity is a lot better.

So we believe that SaaS is more than just a -- an economic reason, there is actually a -- a very intrinsic way that we believe every model will end up. Now, we also believe that it will take some time. Every question that has ever been asked about well, is my information secure, is not -- is not new because back in the days when people started using banks instead of putting things under their own mattress, they believed it was much more interesting and secure to put it under their own mattress than, so to speak, under someone else’s mattress.

But banks have become really good at managing money and, in fact, money it’s all being a proxy already. You can imagine that today, no one in their right mind would not have their money in the bank and therefore, it has become very accepted. That took a while but today that’s a very common model. And very few people have pumps and/or generators in their backyard unless they really, really have to, which is -- which is -- in places where there is not network available to get to those resources.

So we believe that the -- the SaaS has come to maturity at this point where a lot of the applications that companies need are available. These applications are enterprise ready; there are SaaS offerings some of which we use as a company. They have hundreds to thousands of people worked on it. In other words, much better scalability, much better security. If anything, any company in the world is -- was running and so we truly believe it’s ready. And we are making a move just a fast we as think that everyone else will.

KD: All right. So how well would you say that the Software-as-a-Service tools are working for you so far and was the deployment smooth or any internal resistance to the change initially?

RB: Now, you have to understand when I answer this question that I -- I firmly believe that SaaS did more than just making the same things available in the -- in the clouds so to speak, it did a lot more. It actually did some things that I believe is crucial to most enterprise software which it had made it easier to use for -- for employees.

So with SaaS came another phenomenon called “shared service” and ease of use. So rather than having a few people enter, let’s say opportunities into a CRM system, everyone now starts to put things into the CRM system. Instead of being a few people enter expense reports; everyone started putting expense reports into the system. So the shared service model was very -- integrated into that SaaS approach.

We have adopted these tools rapidly. How well do they work? Well, they actually better from the perspective of the end-user. So let me give you an example. If an end-user has an expense report, who do they trust most to put into that information? Well, you’d say themselves. What if they are not in the office but on the road? Well, say you’re a sales rep and want to do that. How do you do that? Well, you do because there’s a -- a way to do that on the Web.

So the Web has produced a whole new thinking on about where you do things, and how you do things, and how easy it is to do things, and that has very much worked its way into the SaaS offerings. So what we didn’t do is take an existing application and just put it on the computer in someone else’s data center and then therefore thought we were done with the -- the thing. We actually changed that existing hard-to-use complex applications and replaced them with simple -- simpler applications that all have the shared service model.

That is really what we did with SaaS. Now, are they -- are they working well? They’re working extremely well. I mean we run a $300 million business on them and I know of many other companies that run smaller and larger businesses on these SaaS tools. The planning is actually interesting phenomenon because the first thing you always want to make sure, I mean, coming from an IT perspective is that it integrates well.

If you’re coming from a user’s perspective, you’re coming from the perspective that you want it work well for you. So easy to user and so forth. SaaS, initially, was very focused on that second phenomenon, making the users happy. Simple software that was not going to be resisted by the end-users, which by the way was a very big problem with a lot of enterprise software.

And you -- you ask people how successful were rolling out SAP or -- or Siebel in the ‘90s to large community of users and, categorically, you would hear about failures of adoption. But it was -- it was astounding that people put in tens of millions of dollars of these enterprise software packages and the -- and the business user, the sales people, the marketing people, the finance people weren’t using them.

With SaaS, it -- it -- I mean, it focuses a lot on making that very complex stuff easy and fun to use and a lot of SaaS vendors have been very success doing so. The IT perspective came in a little bit later, which is -- so now -- is SaaS is a new island that people are creating or does it work well? So for example, if you put in an on-demand CRM systems like Salesforce or SugarCRM.

Does it communicate well with your CRP system, Oracle, SAP, or JD Edwards, or Lawson, or even QuickBooks for that matter in -- in exchanging information between what customers want to buy from you and what customers actually have bought from you? Now, -- now, that has been addressed over the last number of years as well and certainly helped by a lot of innovation in software-oriented architect -- in service-oriented architectures and so forth. We’ve massive innovation there. So the tools work well for the end-users, they also now work really well for the actual departments who actually need integration.

KD: All right. That sounds good. So are there any on-premise software applications that Serena has not been able to replace with SaaS and do you anticipate SaaS being able to replace those in the future?

RB: So today, there is fundamentally no application that we have that cannot be done in -- in SaaS. We had made the assessment a while back and fundamentally for everything that we need to do as a company from payroll, to telephony, to CRM, to financial, and so forth, everything -- everything we do is -- there is a SaaS opportunity. And clearly, we have done a lot it already.

Today, we’re still running a -- an on-premise version of SAP but we’re also managing it ourselves so it is -- it is a managed service. So it is kind of half-way there and in the SaaS -- in the SaaS world and that we don’t run that on our own computers, it would be managed by a -- by one of our business partners. But if you think about it, I mean, we -- we run pretty much everything else that we do in SaaS.

And the telephone I speak to you over is run through a SaaS offering from Avaya. The CRM system that we use is run by Salesforce.com. The anti-spam that is it governing our email is run by -- by Google and is, in fact, our email is soon going to be run by Google. We use Facebook as our intranet so we don’t have our intranet we Facebook as our internet. We use BroadCo for own video services. We use LucidEra for our business analytics. These are all SaaS offerings.

So our IT department and our server room is pretty darn small if you think about it because all it needs to be is a big part onto the internet so that we can tap into all these services and -- and do our business. And -- and I think a lot of server rooms will be very, very empty soon because those servers don’t run in our own buildings anymore, they run in very large, well-managed shared data centers like somewhere in West Virginia, somewhere in -- I don't know, somewhere I don’t even care so much about where it runs, but it runs with a service level agreement that is inherently much better than what I can do with my IT budget.

KD: Any thoughts on the idea that on-premise software will always be necessary for one reason or another? Some companies seem to be putting that forth in the media.

RB: Well, there are two reasons why on software -- on-premise software will continue to survive. And one is that not every application will end up in SaaS. The -- the way that SaaS vendors sort of speak can operate it is because they can provide kinds of skill. There are many applications that are applications of one. If one company or a small amount of companies run an application that is highly proprietary and it doesn’t really make sense to put into a shared model because the economics would never work.

Now, in the late ‘90s we saw a phenomenon called “ASP” where someone else tried to take on the complexities. So instead of let’s say Bank of America building a -- a large data center. Exodus tried to build a large data center and kind of moved the complexity of running that application from Bank of America on to Exodus. The problem was that there was no economies of scale. The only thing that was shared was the floor space.

Now, that is not a very interesting economic model and all those companies, as you know, went out of business because there -- there was no money to be earned. Now, in SaaS, there is a large amount of applications that whether I do them or not I can't really compete on them. I can't compete on my implementation of a CRM system, or by implementation of a financial management system, or a manufacturing system, it just has to work and so all those applications will go first.

Then what you’ll see is that there are somewhat more practical applications that will go. And then what remains are applications that are highly proprietary, probably, very different seating that will not end up in SaaS. But there - -there are many applications; many that do not need like a special treatment. And what what SaaS has done is made a lot of people realize that all the stuff that’s put into building its own application actually wasn’t all that necessary because there was a good alternative, good enough alternative, that was more affordable and, in fact, much better to work with.

KD: Great! This has been a discussion with Rene Bonvanie, senior vice president with Serena Software. For more great podcasts, white papers, blogs, news, and more on SaaS, Web 2.0, and SOA, be sure to visit www.ebizq.net. Thanks for listening and have a great day!

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