In an effort to more rapidly deliver business value, CIOs are increasingly looking to software as a service (SAAS) technologies to automate business processes and unlock data from departmental and system silos. Low-cost and low-risk, SAAS is proving to be an effective way to conserve cash, optimize IT resources, and move investments from capital expenditures to operating expenses.
In one case, a textile manufacturer saved $1 million a year by switching to SAAS-based back office software that could pull together disparate company functions such as financials, human resources and inventory while connecting them more closely with customers and suppliers worldwide. By eliminating costly infrastructure, the company went from spending 3 percent of revenue on the traditional solution to 0.1 percent on the new SAAS system.
In another example, an electronics manufacturer used a SAAS solution to streamline supplier deliveries through right-time monitoring of supplier performance. By rating suppliers to eliminate poorly performing ones, they reduced inventory and administrative costs, improved quality, and obtained better pricing through volume agreements with a smaller number of vendors.
While early SAAS systems such as sales force automation (SFA) were often point solutions, CIOs are now focused on optimizing business processes across their organizations using integrated SAAS systems. Unless these systems work together seamlessly and are supported by associated best practices, they won’t maximize productivity and deliver on the promise of continuous performance improvement. Consider the following five best practices to maximize the value of your SAAS investments.
Best practice No. 1: Focus on business processes
An end-to-end business process or value stream starts and ends with the customer. From the initial contact with a prospect through the sales cycle, order fulfillment and ongoing support, multiple touch points with both the customer and others executing transactions can impact the customer relationship, business efficiency and performance. All of these touch points need to be supported by integrating business systems (such as CRM, ERP, e-commerce, manufacturing, and logistics systems) and processes that remove silos which would otherwise prevent optimal data flow and collaboration across the stakeholders.
Integration also ensures consistency in addressing operational, financial and transactional aspects of the business so that companies can use data more effectively to optimize performance. The right mix of SAAS solutions, including an integrated operational performance management layer, creates a holistic view of the business. The right mix ensures that everyone has access to timely, relevant data and analytics to identify problems, make fast decisions and take action.
Best practice No. 2: Ensure compatibility
Virtually all IT environments are comprised of a combination of multiple SAAS and on-premise systems and may include platforms developed in-house. While SAAS solutions can play well in heterogeneous environments, it’s critical to ensure that SAAS offerings from multiple vendors are interoperable. Look for SAAS systems that are pre-integrated by the vendors, creating turnkey solutions that can be quickly deployed.
Certain SAAS systems serve as development platforms on top of which vertical solutions can be developed. One SAAS system acts as the host of other SAAS systems, thus eliminating any integration issues and optimally supporting business processes. In many cases, this creates an ideal architecture as integration is supported “out of the box.” Additional integration outside of this environment may also be required.
The ability to connect to and leverage data from multiple SAAS and on-premise solutions is particularly important for operational performance management and business intelligence since these have to span entire business processes to deliver full value.
When multiple SAAS systems are deployed, five questions to ask are:
1. Do the vendors’ solutions work well together?
2. Can they demonstrate interoperability without the need for additional integration?
3. Have the vendors done the necessary integration around data, user interface and security?
4. What APIs are available if additional integration work is required?
5. What additional value do I get from the synergy of the multiple systems?
Best practice No. 3: Demonstrate value
When considering certain initiatives such as traditional BI, a large percentage of these projects fail, demonstrating very little business impact. Costly analyst resources or homegrown systems have never gotten off the ground or have not delivered the potential ROI. According to a 2009 BI Scorecard report, only 21 percent of respondents rated their BI deployments as very successful, while only 24 percent of users were actively using the solutions.
SAAS solutions implement in a matter of weeks rather than many months and lower the TCO. Instead of the financial and operational onus being on the customer to integrate multiple systems and get the infrastructure in place, you now have the option to implement combined SAAS solutions in which the vendors have already done the heavy lifting. The reduction in implementation time and expenses means companies can free up resources for use elsewhere, for initiatives that drive business growth.
Connect People with Data
Best practice No. 4: Connect people with data
You must connect the right people with the right data. The only way to effectively filter relevant data to authorized employees is to consider the end-to-end business process and touch points. By segmenting the value stream into various substreams (for example, first contact to order, invoice to cash, ongoing support), IT can determine who is responsible for making decisions during each phase, then service them with information needed to conduct transactions and optimize value stream performance.
Combining disparate IT systems creates a single ecosystem for key business areas, transactions and data. Depending on the value stream in question, this can be extended to include additional data from areas such as production, safety or HR. For faster decision making, you should also consider data filtering based on role, continuous updates, proactive alerting, interactive scenario analysis, and analytics. This ensures a proactive approach to addressing issues and shortens the time between an issue arising and its resolution.
Best practice No. 5: Use SAAS to make IT more agile
In the same way that companies look at the customer value stream, so should IT consider their own value stream, as they are continuously working with business units to determine how to better service them. Combined SAAS solutions become the perfect fit for a business-savvy IT department because they remove the burden of dedicating resources to “IT plumbing” (such as building or renting data center space, setting up servers and operating systems, and implementing databases, middleware and applications) and gluing it all together. Plumbing does not create business value; optimizing business processes and providing actionable intelligence does.
By turning IT into an agile service center rather than a technology cost center, the CIO can deliver greater business value, leveraging SAAS to free up resources and quickly deploy systems to react to their customers’ needs in an agile fashion.
The sum of SAAS is greater than its parts
The only way to satisfy the IT demands of ever greater performance improvement goals from the business is to recognize the core competency of IT. Is it to maintain data centers, servers, infrastructure, and build custom software? Or is it to look at existing and new services and applications that can be configured, combined and tailored to meet business needs?
With the increasing maturity of multiple SAAS solutions working in harmony, IT can deliver value and agility at a lower cost, with lower risk. IT can also play an appropriate role based on resources-from brokering a turnkey solution to being self-sufficient and deploying/configuring the solution to somewhere in the middle. In any of these cases, the SAAS ecosystem supports the business processes and transactions to connect all decision makers with relevant data and make good on the promise of continuous process improvement.
Guido Haarmans is Vice President of Developer Programs at NetSuite. Guido has nearly 20 years of experience in developer relations, alliances and CRM at both SAAS and traditional software companies. Previously, Guido was director of developer relations at CollabNet, a provider of SAAS solutions for application lifecycle management and the company behind Subversion. He was also director of customer management at Driva Solutions. Earlier in his career, Guido spent 10 years at Autodesk. Guido has a Master’s degree in Building, Architecture and Planning from the Eindhoven University of Technology in the Netherlands. He can be reached at [email protected].
Wayne Morris is CEO of myDIALS. Wayne has over 25 years of experience in executive management, strategy, marketing, sales and technical roles in software, services and hardware companies. Previously, Wayne was CEO and managing director of Citect Corporation, senior vice president of worldwide marketing for McDATA, and chief marketing officer and senior vice president of corporate marketing for BMC Software. Wayne was also vice president of marketing at Enterprise Software Corporation (ESC), business unit manager with HP, and a consultant, professional services manager and account representative at Wang Australia. Wayne is co-author of “Foundations of Service Level Management,” published by SAMS. He can be reached at [email protected].