Do SaaS and BPM belong together?

Editor's Note: The union of BPM and Software as a Service (SaaS) offers attractive benefits for businesses, but the approach faces significant challenges on the road to widespread adoption. Part I of this special report explores some remaining concerns and risks. Part II offers expert advice for combining BPM and SaaS.

"If you follow the Software as a Service market, the fundamental value proposition is the economics," says Jeffrey M. Kaplan, managing director of the THINKstrategies consultancy.

The economics take two forms. First, there's the cost savings associated with SaaS solutions, and, in addition, the ROI. That's because you can gain value from SaaS applications more quickly than through traditional on-premise deployment, Kaplan says. In fact, SaaS may even generate unanticipated value.

As an example, he cites a kind of crowd-sourcing phenomenon--as each customer suggests improvements, everyone who shares the SaaS benefits from the advice. Kaplan says there may be ways to share insights as well--especially with BPM: "To optimize a business process, it is very likely you would want to be able to leverage the best practices of third parties," he says.

SaaS-BPM benefits

Kaplan readily acknowledges that, right now, those additional BPM-SaaS benefits are more theoretical than demonstrable. But he predicts that BPM-SaaS marriages will become more commonplace in the coming years as organizations become comfortable with SaaS and with the idea of aggregating business information. Likewise, Kaplan believes that, moving forward, businesses will be interested in gaining greater access to the kind of aggregated information that's part of the inherent potential of SaaS.

This, he says, hints at the concept of Data as a Service (DaaS), in which raw data is brought together and packaged and priced as a secondary product. Data from multiple sources, but often generated through the primary application that the vendor has to offer, becomes a resource in its own right.

So far, says Kaplan, most SaaS vendors have been focused on just winning and retaining customers. As a result, they've had to wait for a critical mass of customers and a sufficient amount of data before they could even begin to suggest this secondary benefit. "Now that they have reached that threshold and have demonstrated that they can securely handle the individual data of specific users and aggregate that data in a way that doesn't violate trust, they are starting to experiment with ways to generate meaningful benchmark statistics," Kaplan says.

Forecasts and trends

In the view of Forrester Research analyst Clay Richardson, the future for SaaS BPM is bright—just not that bright. He still sees a lot of concern about risk and perceived risk, adding that most of the SaaS BPM activity he has seen is "try before you buy"—that is, situations in which companies are leveraging SaaS as a set of training wheels. "After that testing period, most companies still seem to want to bring BPM in house," Richardson says.

Regardless of whether data aggregation and sharing will be a substantial part of BPM-SaaS, Gartner analyst Michele Cantara says it's clear that many companies want to take advantage of SaaS and the cloud. There's a simple reason for such strong interest: "It will defray their capital costs," she says.

"One of the trends we see is the use of BPM platforms in a Platform as a Service or cloud-services model as another deployment option," Cantara continues. There are still concerns about data location issues, which are becoming increasingly complex, particularly if you take into account a lot of the country-specific laws about data location, she continues (a concern that Richardson echoes.) "It's easy to say 'I could have all those benefits from sharing resources,' but it's hard to actually do it and figure out how to be in compliance," Cantara explains. In fact, it's easier to have a dedicated environment. In either case, she says, there are attractive savings--or at least the avoidance of capital expenditures that the cloud offers.

Cloud considerations and SaaS BPM

There are fewer concerns when companies choose to put the development and test environment for their BPM platform in the cloud, which obviates the need to buy hardware or pay maintenance. However, Cantara acknowledge that such situations are really just dedicated test environments. "They may be sharing the cloud infrastructure, but that's it," she says. "They don't have to buy machines or put in software infrastructure, but they aren't sharing data with other companies, so that gets around data privacy issues."

Cantara says SaaS BPM has particular advantage for smaller companies, especially in terms of costs. "For larger companies, they are still interested in doing this, but we have found in some case the solutions end up getting funded from line-of-business [(LOB)] budgets rather than IT," she says.

In fact, she adds: "We just finished a survey with 600 responses for companies doing BPM, and 66% of the time they were funding from the LOB."

Part II of this special report offers expert advice for combining BPM and SaaS.

About the Author

Alan Earls, a journalist who specializes in writing about technology and business, is based in the Boston area.

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