Busting the Myths About SaaS

by Jim Berkowitz on January 5, 2009

Here is a synopsis of an excellent article by Fergus Gloster, Senior VP EMEA, at salesforce.com, Busting the Myths About SaaS:

A recent conference in Dublin heard that a third of traditional software projects fail. CIOs in large organisations are under increasing pressure from business units to deliver usable technology more quickly. As markets slow, business users can ill afford to wait around for 18 months while an on-premises software development is rolled out.

Speed, ease of implementation, no capital investment costs and rapid return on investment have been the driving force behind the growth of Software as a Service (SaaS). But can it deliver to enterprise the benefits it has demonstrated across SMEs?

I believe there are four great myths when it comes to enterprise implementation of SaaS…

Myth 1: SaaS is only for SMEs

A recent report from Saugatuck Technology found that only 4% of large enterprises (5,000-plus employees) are not planning on deploying SaaS.

Myth 2: SaaS is only for CRM

Michael Ybarra, author and monthly columnist for SearchCIO-Midmarket.com, comments that the SaaS model continues to win adopters because of its speed and ease of deployment. While the most popular applications continue to be human resources, collaboration and CRM, more companies are also looking at the model for enterprise systems as well.

Myth 3: It’s hard to integrate SaaS with legacy systems

A Forrester survey found that integration was the most common reason why tech execs shied away from SaaS. However, according to Frank McCracken, a founder and executive vice-president of Saaspoint, many firms are missing out on the benefits of SaaS because they think that integration with existing legacy systems such as Oracle, SAP or Sage is impossible or overly complex and time consuming. But, he says, SaaS applications vendors have a better track record of maintaining stable APIs than do the legacy on-premises vendors. He points out that not only can CIOs retain their legacy on-premises software but they can also enhance its usability and adoption. The traditional headaches around integrating and making software upgrades compatible are eliminated under the SaaS model.

Myth 4: SaaS is not for enterprise application developers

According to David Linthicum of ZapThink, enterprise architects must plan for SaaS. “Many Global 2000 enterprises could find that 20-30% of their enterprise applications are SaaS-delivered and need to function like any other enterprise system, working and playing well with others – users, legacy systems etc.” Meanwhile, Beagle Research Group points out a major reason why SaaS has infiltrated the enterprise, suggesting the traditional software paradigm is in serious trouble. “Application development has become complex and expensive to the point that it presents a serious impediment to business growth,” it says.

One of the drivers for SaaS becoming central to enterprise application is that it releases CIOs and their developers to innovate. As the research company CXO Media points out: “Too often, IT departments are infrastructure mills, with most of their resources bound up in the rote exercises of maintaining hardware, patching software, tuning databases and running backups.”

A study by IDG Research Services with CIO Magazine subscribers in March 2007 found some 80% agreed that on-demand allows IT to focus more on innovation and less on infrastructure.

Saugatuck Technology puts it best: “SaaS is expanding well beyond its early low-cost, easy-to-deploy, niche application roots to become an important business computing force that is fully integrated with broader enterprise architectures. SaaS is growing up and going global.

SaaS could indeed be the catalyst that finally transforms the CIO into an enterprise’s chief innovation officer.

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