SAAS is on its way to becoming the rule rather than the exception for application delivery.
The software-as-a-service model still has some barriers to break, but analysts, vendors and customers agree that it's come a lot further than anyone expected it to even five years ago. And more barriers are likely to be broken before the decade is out.
Even as SAAS began gaining serious traction in 2006, no one would have guessed it would become as strong an option as it has. Most customers and analysts at that time agreed that using the Internet to deliver software was fine for non-business-critical applications, but that the service model presented too many pitfalls for most other enterprise applications-with security and reliability being the primary concern.
But the barriers began to fall when CIOs recognized that companies like Salesforce.com-credited as the standard-bearer for SAAS and the first SAAS company to break the $1 billion annual sales barrier-were able to provide higher availability and security than their own IT departments.
Now, a wide variety of vendors have successfully brought different kinds of applications to market using the SAAS delivery model and have convinced a surprising range of industries to adopt this service.
"The breadth of what enterprises are using is growing, and there are more solutions and a wider range of categories applicable to broader markets," Forrester analyst Liz Herbert told eWEEK. "SAAS used to be limited to North America and SMBs, but a lot of that is changing."
Applications without borders
One company demonstrating how deeply SAAS has penetrated is Santander Consumer USA, a subsidiary of the multinational Spanish financial institution Banco Santander. Santander has implemented SAAS-based IT management software-a technology category no one would have suspected SAAS could deliver efficiently, and one that most analysts assumed IT departments would jealously guard for themselves.
Not so Santander's IT department. According to ITIL Service Administrator for IT Kimberly Rogers, who is part of the 250-person IT department, the company switched from an on-premises tool from BMC to a SAAS application from Service-now.com. This allowed Santander to eliminate a developer position and allocate it to one that affects the business more directly.
Because the application is served through a browser, Rogers and her staff can access the system and receive alerts from any browser, including mobile devices.
She added that the Service-now application includes a "very strong reporting module. Once you build those reports, they don't go away with the next [software] upgrade. And if we do customizations, those customizations don't go away as they do typically with client-side applications," she said.
Rogers, who had never worked with a SAAS-based application before, added that "security can be as tight as you want it to be."
Another SAAS proof point is Flextronics. Chris Barbin, CEO of Appirio, a SAAS software integrator, noted that Flextronics, a multinational electronics manufacturer, has switched entirely to a SAAS-based human resources application from Workday.
Moreover, SAAS isn't just the province of companies with sophisticated understandings of IT or complex supply chains. Consider the case of construction contractors Alfa Tech Cambridge Group, which replaced Prolog project management software with a SAAS application from CMiC that does double-duty as a project management and collaboration tool.
"One of the hardest things about construction is communication and collaboration," said Pete Caputo, senior project manager at Alfa Tech.
He told eWEEK that management has gained the confidence to open offices in new markets because the application is centrally hosted, eliminating the danger of "multiple versions of the truth."
"It's a huge leap forward in how project management software works," he said.
Not only have modern SAAS applications assuaged security concerns, but the SAAS model itself is seen by some as the most secure approach to handling data. According to Scot McLeod, vice president of marketing for Compliance 360, a vendor of GRC (governance, risk and compliance) management software, the SAAS model makes it easier for vendors to provide their customers with new security features suitable for their respective industries.
According to Michael Rasmussen, president of Corporate Integrity, a GRC consultancy, multinational organizations have implemented SAAS-based tools because they need to quickly communicate new regulations, policies and codes of conduct, as well as manage third-party relationships.
This is particularly the case when the political environment is likely to produce a constant stream of new regulations with tight compliance deadlines. "SAAS can put out those burning fires rather efficiently," said Rasmussen.
Compliance 360 and compliance application vendors such as Wolters Kluwer and Recommind include enterprise search functionality-another feature that was supposed to be off-limits to SAAS.
Vendors have also begun marketing business intelligence and ERP applications successfully, not least because those SAAS-flavored applications have been championed by well-known names. Business Objects had been marketing a SAAS version of its Crystal Reports reporting tool with limited success, but it is gaining much more traction in the market since becoming a division of SAP.
Likewise, Workday benefits from being founded by well-known PeopleSoft founder Dave Duffield.
SAP has also jumped on the SAAS bandwagon for ERP products with Business ByDesign, which is aimed at companies with more than 100 seats.
But Herbert of Forrester said that there still isn't an ERP application on the market for truly large enterprises. "Let's put it this way: I don't think a multinational gas company views [SAAS-based ERP vendor] NetSuite as a serious alternative to SAP," she told eWEEK.
Another area where SAAS has so far been lacking is in applications for specific verticals. But SAAS vendors have surprised us before, and it's likely that this model will continue to break down barriers.
Michael Hickins is a New York-based freelance writer and frequent contributor to eWEEK.