SaaS: Are You Ready to Take the Leap?

What you should know about SaaS before deciding to implement in your accounting departments.

SaaS - the not-so-new buzzword in town.

Even though it's been sometime since Application Service Providers (ASP) remodeled themselves as Software-as-a-Service, the concept is never really out of news.

The latest being Google's announcement that it is planning on ramping up its SaaS offering. Google currently offers its free office suite to personal users, as well as very small businesses and its Premier Service to businesses of all sizes for a cost a year per user. The latest announcement stressed that Google is focused on developing its suite to play to the service's strengths - mainly collaborative work.

It is a known fact that many large corporations are jumping in the SaaS bandwagon. For some, SaaS was brought in as a way for to get applications up and running quickly with minimal involvement from IT.

In a report released in March 2008, Forrester Research said that the use of hosted software products in companies with more than 1,000 employees grew by 33% from 2006 to 2007. The survey of found that the most popular hosted services are human resources, CRM and collaboration tools.

On the other hand, it is also true that many large companies have long avoided hosted services. This has been primarily because of concerns about security, customization, integration and long-term costs.

But in recent interviews and studies, IT managers at some organizations say they are turning to (or at least evaluating) hosted products as a way to relieve management of some non-mission-critical applications.

Gartner predicts that corporate adoption of hosted software will grow by 22.1% annually through 2011, more than double the projected growth rate for packaged applications.

Gartner also says that Financial Services is the second-largest industry user of SaaS, after the technology sector.

But most of the current financial services SaaS deployments are CRM applications. "Wall Street and financial services firms are more and more looking at [SaaS] from the CRM side of the fence," says Rob DeSisto, VP and distinguished analyst at Gartner.

The fact of the matter, when looked closely, is that in financial services, there are relatively few situations where there is a CRM kind of application that's pretty much the same for everybody. That's why SaaS, in a financial services context, will take a long while to catch on, experts opine.

SaaS holds tremendous promise for enterprise evolution, but perhaps only when deployed in conformance with ongoing architectural development.

There are a few lessons that can be learnt from the people who have implemented and using hosted business applications for some time now. Most of them warn that prospective adopters should proceed carefully when selecting a vendor.

Some of them are outlined below:

• Take an in-depth look at your requirements. Then do a check if SaaS is the only option or just another option for getting things done.
• Once you have decided that SaaS is the right option then comes vendor selection part. In many cases, vendor xyz is the right answer. However, keep abreast of new entrants into the market - and, particularly, new areas of functionality being provided over the Internet.
• One of the additional suggestions from these guys about vendor analysis is to conduct background checks, contact referees and perform due-diligence assessments of service-delivery track records
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• Don't implement a SaaS solution with the same methodology you might have used to implement premise based solutions. You had control over every aspect of the development process. Here it's different. To realize the benefits of SaaS, you need a SaaS specific methodology.

The contract development is another area you need to be very careful about.

Numerous corporate bosses have realized that they cannot ignore an offshore strategy - more specifically an ' India' strategy. This is mainly because of the obvious cost-savings: a recent study showed that most outsourcers claim anywhere near 32% cost savings thanks to outsourcing overseas.

Below is an annual salary comparison chart of two of the biggest players in outsourcing - America and India - the former being the sender of work and the latter the recepient.

• Forecast the number of users you will add to the system at the outset if you are considering large SaaS implementations
• Negotiate agreements if you think they may need to scale usage up or down
• Think about more than just price and users in negotiations

Forrester recommends holding SaaS vendors accountable for data integration by clearly mapping out current and desired processes -- and defining a list of standard and customer fields that should be in the on-demand application. Organizations should also lay down how they will get their data back at the end of the contract, should they decide to end the relationship