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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Here are the most interesting CRM-related news stories from the past week:

• Zoho Makes Cloud Data Accessible with Zoho CloudSQL
• Sage to step into the on-demand ring
• Cloud Computing Giant and Facebook Collaborate: Force.com for Facebook Is Born
• Entellium Files Bankruptcy, Intuit Eyeing Assets
• Maximizer announces mobile CRM support for Symbian OS
• FrontRange Solutions Releases New License Manager
• Neocase Software Appoints Julien Dahan Chief Executive Officer
• Vantage unveils vPlatform CRM for SMBs
• SaaS Accounting Software Released By CODA
• SaaS to Grow by 90% Worldwide

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In 2009, these technologies can provide companies with a competitive advantage in what is expected to be a very tough year on the bottom lines of IT budgets, IT management and IT vendors. However, even in an economic downturn those companies that invest, develop and capitalize on technologies that save money while improving the efficiency and effectiveness of business have an opportunity to grab significant market and mind share with new and existing customers.

Here are Samuel Greengard’s Top 10 Trends in IT for 2009…

1. Software as a Service (SaaS) - A few years ago, the idea of running software remotely seemed preposterous. Bandwidth limitations, performance obstacles and IT administration issues made hosted software impractical. But times change. Today, software as a service (SaaS) is growing at an annual rate exceeding 40 percent. In fact, it is expected to command a 23 percent share of the $120 billion U.S. software market by 2010, according to RBC Capital Markets.

2. Virtualization - This technology has already made its mark on the data center. According to various industry estimates, between 50 percent and 60 percent of all servers are now virtualized. The goal, of course, is to reduce server sprawl—and the inefficiencies and higher costs associated with it.

3. Enterprise Mobility - Over the last few years, wireless technology—including 3G cellular data networks and widespread Wi-Fi—has opened the door to an anytime, anywhere business model.

4. Energy-Efficient Data Centers - Chip and PC manufacturers are moving toward more energy-efficient components—including improved memory and resource management—but the big action in 2009 will be in the areas of virtualization and storage, Daniel Starz, author of “Greening Your Business,” predicts. “Virtualization eliminates energy costs, maintenance outlays, cooling expenses and data center costs by as much as 90 percent,” he notes. “The payback is enormous, and it’s something organizations can no longer afford to ignore.”

5. Security, Risk and Compliance - Anthony Noble, vice president of IT Audit, at Viacom in New York City, and others in the IT industry believe that automation is essential—particularly on the risk and security compliance side of things. This includes everything from intrusion detection to authentication; from patch management to analytics used for security. A growing number of organizations are turning to self-encrypting hard drives, two-factor authentication (to replace simple passwords) and security suites that provide central control panels. This trend will continue into 2009, as continuous-monitoring tools become standard in the enterprise.

6. Social Networking - LinkedIn, Facebook, MySpace and a spate of similar sites have transformed social networking from a buzzword into a business buzz saw. Companies as diverse as American Express, Del Monte and Cisco Systems have unleashed powerful social networking tools, including wikis, blogs, discussion groups, collaborative filtering, and even applets and games. The concept is allowing these companies to tap into the power of human connections and knowledge in ways that were unimaginable only a few years ago.

7. Web 2.0 - The evolution of the Web has been nothing short of amazing. Though each generation of tools creates new opportunities, the current and emerging array of Web 2.0 applications is completely revolutionizing the enterprise. The growing use of interactive maps, blogs, wikis, mashups, social bookmarking, enhanced search engines, RSS feeds and social networking is only the start. Web 2.0 tools are also making it easier to manage data, tasks and business processes.

8. Document Management and E-Discovery - Although vendors are adding more sophisticated capabilities to their applications—including the ability to track text messages, IMs and other types of unstructured data—the main challenge is figuring out how to develop systems that retain, manage, and retrieve documents and data quickly and seamlessly. here’s some good news for enterprises looking to put solutions in place: “It is likely to be a buyer’s market in 2009,” Kyle McNabb, principal analyst and research director for Forrester Research concludes. “Vendors entering the market are introducing products and solutions at a much lower price point than they were in the past.”

9. Project Management and Project Portfolio Management - In today’s time-sensitive and budget-conscious world, getting projects finished on time is paramount. Not surprisingly, more and more organizations are turning to structured systems and software to track all the details. Consequently, project management (PM) and project portfolio management (PPM) have moved into the spotlight.

10. Web and Video Collaboration - Today, collaboration tools are poised to go mainstream and further change the way business is conducted. According to the Boston-based research firm Aberdeen Group, 63 percent of companies say they will be using videoconferencing and so-called telepresence systems (essentially, a form of videoconferencing with high-quality images and audio) by the end of 2010. Only 18 percent say they have no plans to adopt these systems.

Also be sure to check out Paul Greenberg’s CRM 2009 Forecast.

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Here are the most interesting CRM-related news stories from the past week:

• Salesforce.com posts 43 percent revenue jump
• NetSuite declares price cut SaaS war on Salesforce.com downunder
• Microsoft personalises Dynamics software
• RightNow Puts the Pieces Together
• SugarCon 2009 to Celebrate SugarCRM Community Accomplishments
• SAP pushes enterprise SaaS with former Oracle exec
• Release of vtiger CRM Integration to Bring Synchronization to Online Stores
• DecipherTech Launches Decipher for Salesforce.com
• Jigsaw for Oracle CRM On Demand Launched
• Bizroof CRM Throws Cash Managers a Bone
• Introducing DubMeNow
• EchoSign 4.0 Empowers Sales to Close Quicker and Easier in the Cloud
• Marketsync Releases direcTouch 2.0
• Thumbplay Targets New Generation with Enhanced Customer Service
• Firms save up to 40% on CRM using SaaS says Gartner
• Palo Alto Software Announces Complete Email Management Solution for Small Businesses Nationwide
• ThinkFree Announces Server Integrator Early Bird Program and Availability of Software Development Kit
• Ribbit Rolls Out VoIP Developer Platform
• VanillaSoft Pushes the Envelope on Intuitive Call Routing
  

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Here are the most interesting CRM-related news stories from the past week:

• NetSuite to promote software through HP resellers
• NetSuite through the lens
• Microsoft offers zero percent financing on Dynamics ERP and CRM
• Email-to-Lead Solution from MTC Now Available for Microsoft Dynamics CRM 4.0
• ExactTarget integrates Salesforce CRM
• PivotLink BI for Salesforce.com CRM Introduced
• Oracle announces Siebel CRM 8.1.1
• Oracle Offers CRM Gadgets to Boost Salesforce Productivity
• Former Oracle executive moves to German rival SAP
• Oracle to launch insurance applications
• Avature Announces Recruiting CRM Version 2.0
• Zoho Announces Status Dashboard for All Services
• ReadyContacts Launches Full Service Marketing Database Management Solution For B2B Marketers
• MindJet Releases MindManager 8, GBM Is Giving Away One Free License!
• Awards Announced for QuickBooks Add-ons
• QuoteWerks Expands Accounting Integrations With 3rd Party Link to MAS 90 and MAS 200
• Wikis Grow, Podcasts and Social Bookmarking Slow
• BlackBerry Storm Gets Release Date, Price
• BlackBerry Storm: A Potential iPhone Killer in the Enterprise

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Here are the most interesting CRM-related news stories from the past week:

• With Dynamics, Microsoft’s ERP and CRM Business Apps Go Head-to-Head with  Oracle and SAP
• Informatica To Offer Salesforce.com Integration Service
• Salespen Application Now Available on Salesforce.com
• New iBOLT Business Integration Suite for Salesforce.com
• Apatar Connects Open Source SugarCRM to Other Apps
• NetSuite Goes Live In Singapore
• New Customer Relationship Management software made for Mac
• Affordable CRM Business Intelligence Software for SMBs by DecipherTech
• Oasis CRM Offers New QuickBooks Interface
• Oracle Buys Haley
• Oracle buys Aussie Ruleburst
• Apprivo launches three new software-as-a-service offerings
• Omni and Intelestream Deliver Open Source CRM Integration for Novell GroupWise
• Jigsaw and SkyData Partner to Deliver Business Contact Data to the Mobile Frontier
• Chordiant Launches Customer Experience Management Model
• Lithium Technologies Expands Social Media Portfolio with Lithium Ideas
• Is underdog LinkedIn poised to beat flashy Facebook?
• Microsoft introduces Windows Azure for cloud development
• Microsoft unveils Web-based Office
• Seven Must-Have Offline Apps For Your iPhone/iPod Touch
• IBM unveils content management solution

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Not surprisingly, SaaS vendors have decided there’s no time like the present to make a full court sales press. In a down economy with slashed IT budgets, when there’s no tolerance for 18-month software implementations and the price tags for on-premise software from Oracle and maintenance fees from SAP applications are not falling, software-as-a-service and cloud computing offerings become more attractive options for businesses.

Gartner recently noted that worldwide SaaS revenue in the enterprise application markets was on pace to surpass $6.4 billion in 2008, which is a 27 percent increase from 2007 revenue of $5.1 billion. By 2012, Gartner predicted, the market is expected to reach $14.8 billion.

Here are five important considerations that business leaders and IT staffers must think about before they sign a SaaS contract…

1. Have You Prevented Against “Sticker Shock” Down the Road?

One of SaaS’s biggest selling points is its simplified pricing model: those pay-as-you-go, per-user monthly fees. The term “flat” usually stars in a SaaS vendor’s marketing materials.

However, companies are still confused by uncertainties in pricing models and contract agreements, note Forrester analysts William Band and Peter Marston.

“SaaS pricing models that seem simple and inexpensive (flat per-user monthly fees) can become costly and complex when users sign up for different pieces of functionality and support options,” the analysts write. “Additional charges often apply for support, configuration services, additional functionality or going beyond a preset storage limit.”

In addition, business users and IT staffers can also be “unpleasantly surprised by difficult-to-enforce service-level agreements or onerous provisions that kick-in at the end of the contract term,”

2. Has IT Been Included in the Decision-Making Process?

It almost seems apocryphal that IT staffers wouldn’t be included at all in today’s SaaS decision-making processes. But the reality is that business stakeholders have become quite adept at navigating the software purchasing world: they know what they want and SaaS vendors oftentimes go straight for the business side to sell their wares.

“Some SaaS buyers get into trouble by not thoroughly evaluating integration or customization capabilities at purchase time. They later go to IT with requests that the application simply can’t support,” note Herbert and Martorelli. “Instead, make sure to involve IT upfront to ensure that the application can support your needs before you buy in,” say Forrester analysts Liz Herbert and Bill Martorelli.

3. Is the SaaS Application Set Mature Enough?

Another reason for IT’s involvement: Vendor selection is of paramount importance right now, especially as startup SaaS vendors and others selling their applications under the cloud computing banner might be here today, but gone tomorrow. “As SaaS continues its fast-paced growth, providers are quick to jump into the market with new solutions,” write the Forrester analysts Herbert and Martorelli. “However, this makes it difficult for firms to feel secure about the long-term stability of their application purchases.”

4. Have You Calculated Total Cost of Ownership?

A late 2007 Forrester Research survey of North American and European software IT decision-makers found that “total cost concerns” was the second-most cited reason for why companies were not interested in SaaS.

In the rush to adopt SaaS, some companies may forget about potentially conflicting total cost of ownership figures. For example, TCO of “SaaS ERP suites likely will be significant and may not compare favorably with on-premises solutions,” writes Ganly, in the Gartner report. This problem applies to vendors as well. SaaS vendors “often have unrealistic expectations of their operating costs,” she adds. “The multitenant architecture needed for SaaS ERP suites results in high internal efforts and costs for the initial setup and the ongoing maintenance and upgrade of the system.”

5. Have You Considered All of the Integration Issues?

While SaaS applications can be implemented much faster than on-premise apps, there are still lingering and tough integration issues that don’t magically disappear with SaaS applications (like, how does IT connect that new standalone SaaS CRM app to the existing legacy infrastructure?). The Forrester survey, for instance, found that “integration issues” was the top reason (66 percent) cited by companies that had said no to SaaS applications.

One critical integration challenge for companies is deciding just what kind of a SaaS integration provider they’re going to use.

Of course, not all of this can be figured out by business stakeholders, eager as they may be. SaaS analysts note that an IT implementation team that takes the time to build a strong business case for the SaaS application and implement it correctly will, in the end, deliver the most value to the business.

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Most small and midsize businesses are eyeing one or more software-as-a-service (SaaS) applications, yet have already made numerous investments in on-premises software. And despite the potential cost upsides of making the move to SaaS, one crucial success factor for running part or all of your business in the cloud is going to be the ability to tie cloud computing applications to on-premises systems.

Recognizing that obstacle, three software and hardware vendors — Boomi, Cast Iron, and SnapLogic — have their sights set on solving the SaaS integration challenges. While their approaches differ for on-premises software, hosted integrations, and even on-premises appliances, these vendors can all help companies integrate their business software, whether it lives on-premises or “in the clouds.”

Integration: The Achilles’ Heel Of SaaS

The state of integration gives many potential SaaS adopters pause. Indeed, a recent Forrester Research survey of companies’ SaaS attitudes found integration was the most common concern for the 38% of businesses that said they had no plans to adopt SaaS applications.

Furthermore, SaaS applications can’t just go hauling out data from inside your firewall. “You prevent that, just as a policy; never will anyone get through my firewall to my application to access my data,” says Chris Marino, CEO of San Mateo, Calif.-based SnapLogic. But at some point, many companies do want their SaaS applications to communicate with systems located inside the firewall. “How do you solve that problem?” Marino asks. “You need integration technology.

Integration Creates Interdependencies

Just as the typical SaaS application requires a degree of set-up and customization before it can be used, integration tools also require planning. In particular, integration creates interdependencies, and that requires keeping the big picture in mind.

“You can’t just throw applications in there and expect to be able to integrate the data across all the systems,” Awana’s Smith says. “That’s not a shortcoming of Cast Iron — that’s just a limitation of business processes and reality.”

That means setting some ground rules is in order. “The best approach is to try to only have the information on one system and use the integration to only display it on the other system, [and] don’t allow editing in other than the system of record,” she says.

What Application Ecosystems Offer

When it comes to solving SaaS integration, Boomi, Cast Iron, and SnapLogic are not the only players in town. Other approaches include numerous SaaS application ecosystems — collections of applications and add-ons certified to work with the core application. Examples include the open-source SugarCRM SugarExchange, NetSuite NS-BOS, and the Salesforce AppExchange.

Ecosystems, however, play by their own circumscribed rules. “Their approach to solving this integration problem is, ‘We solve the integration problem — just bring your data over here,’” Marino says. “And for some classes of uses, that’s the solution. But it’s not going to work for everybody.

Then there’s the question of pricing. SaaS applications often attract companies looking for a bargain. And perhaps not surprisingly, SaaS integration services do seem priced to appeal to the masses. For example, Boomi charges $65 per month, per connection, to an application such as QuickBooks or Peachtree, and $135 per connection, per month, to the likes of Salesforce, Intaact, or a database. “We wanted the reaction of the customer to the pricing to be, “‘Oh, this is a no-brainer,’” says Rick Nucci, chief technology officer of Boomi.

Finally, SaaS integration providers solve a slightly different challenge. The notion of a business being driven by a set of monolithic applications has begun to change, with mash-ups, widgets, wikis, blogs, and the like heralding a new era of lightweight applications that may just do one thing, albeit extremely well, says Laurent Lachal, research director at London-based Ovum. “The need now is not just to integrate a system, but to integrate a much wider array of systems — from a software-as-a-service to a small Google widget,” Lachal says.

Will Integration Become Baked In?

Today, SaaS applications offer soup-to-nuts software functionality, all hosted in the cloud. In the future, might integration itself become “baked in” to SaaS applications? In fact, that’s exactly what Ovum’s Lachal predicts will happen during the next five years.

In addition, Lachal expects distinctions between on-premises and cloud computing software to become largely irrelevant. “We are entering a hybrid world,” says Lachal, one in which on-premises and cloud computing approaches will co-exist and be offered by the same vendor. Accordingly, “the key is not to say, ‘I want one over the other,’ but determining — based on your own requirements — how you weave the two approaches together,” he says. “And that’s where integration as a service comes into play.”

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Here are the most interesting CRM-related news stories from the past week:

• On-Demand Software Sector Facing Gloom Over Spending Worries
• Entellium execs fudge the numbers, face fraud charges
• Entellium Customers, Employees Find Sanctuary in Salesboom’s Rescue Initiative
• SugarCRM: Opening up the source to SaaS
• Oracle Snags Primavera
• SplendidCRM Launches 2.1 on Mono/Linux
• Datacor Announces Promax ERP & CRM Software
• TargetX Unveils CRM System for Student Recruiting
• QuoteWerks Expands CRM Compatibility With Support For ACT! 2009 and SalesLogix 7.5
• Jigsaw Enterprise Clients Report Increased Efficiencies
• Demandbase Accelerates Growth of B2B Lead Generation Platform with Jigsaw
• Neolane Deploys Campaigns from One Silo to Multiple Media
• Semantra 2.5 Strengthens Conversational Analytics for Microsoft Dynamics CRM
• IBM launches Bluehouse, a Facebook for business
• Infopia Extends Storefront Functionality

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Enterprise software investments are make-or-break, long-term deals—huge outlays of capital that can span months or even years. Now that we’re all living in a world of hurt, it’s become apparent that the banks still left standing after this quarter won’t be dishing out credit as easy as before.

So what if your company needs serious finance help with your intended software or services plans right now?

One option, notes Paula Rosenblum, a managing partner at Retail Systems Research (RSR), is to look at software-as-a-service (SaaS) for tech investments. “Over the short term, capital may be hard to come by. SaaS allows a company to buy only the number of transactions and horsepower it needs,” she writes in a recent RSR column. “Non-intrusive optimization technologies can often bring rapid ROI by taking sales and order information and spitting out better assortment and pricing plans.”

On the other side of the fence, what if you’re a software vendor, and you can’t close any deals now because your customers can’t get the necessary financing?

“Enterprise software and service vendors without proper access to credit lines may find themselves unable to close deals with clients shut out from the credit markets,” says Ray Wang, a VP and principal analyst at Forrester Research.

Wang points to a deal that enterprise software-maker Infor announced in late June 2008. Infor now offers customers financing options through IBM’s Global Financing arm, which is the largest IT financier in the world, according to the two companies.

The new financing relationship allows Infor’s customers to “move forward with their technology initiatives while spreading up-front payments over time, conserving cash for other investments,” notes the announcement.

Hmmmm, isn’t this how we got into this mess in the first place?

Whatever you think of the “benefits” to the customer, Wang thinks the financial ability that vendors such as IBM, Microsoft and Oracle have to provide financing deals to their customers is critical, especially given the horrific state of the economy. “Vendor-led financing initiatives may prove to be the lubricant that keeps tech spending moving forward,” Wang says.

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