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7/3/2007
09:17 AM
David Linthicum
David Linthicum
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SaaS-Only Enterprises Are On the Horizon

The notion that an enterprise can run entirely on SaaS sends many traditional software folks running for their Red Book IBM manuals, and rocking back and forth muttering "Say it's not so. Say it's not so." However, there are some small businesses out there that are approaching the state of SaaS-only operation, and many companies are sure to follow.

The notion that an enterprise can run entirely on SaaS sends many traditional software folks running for their Red Book IBM manuals, and rocking back and forth muttering "Say it's not so. Say it's not so." However, there are some small businesses out there that are approaching the state of SaaS-only operation, and many companies are sure to follow.Today it's very possible to create a SaaS-only business considering that you can get your CRM, accounting, payroll, and perhaps even vertical market applications delivered as services. Moreover, you can get the niche applications as well, such as human resource management, marketing program tracking, and even SaaS-delivered applications to monitor and manage your SaaS-delivered applications. Just because you can do it does not mean you should, but the exception could be for small- to mid-size businesses.

The ROI from SaaS is relatively well known and proven, and many smaller companies looking to drive big-company business processes understand that the price-per-seat model that most SaaS vendors employ means they can purchase first-rate business processes without having to invest in a data center or the people required to run them. Thus, if it makes sense for one application, it could make since for all.

There are two possible paths to the SaaS-only enterprise: a forced migration and a natural migration. The forced migration to SaaS is really for those with a zealous religious bias toward SaaS. They like the model and think it will save them money. Indeed, they could overspend in chasing SaaS, but they have a firm belief that SaaS is the future. Not a bad strategy, as long as you keep your eyes wide open.

The natural-migration path will be followed by the majority of SaaS users. These people will wake up one day to find that 50 percent of their core applications are hosted outside of the enterprise, but it seemed to happen without a strategy for doing so or a clearly defined business need. In many instances it was just the path of least resistance, and the agile, practical and innovative IT groups in these smaller companies just made tactical calls around application outsourcing. After awhile it became a SaaS strategy by default.

The SaaS-only enterprise is not only possible, a few already exist today. As time goes on this will become more than a trend, it will be a strategy that will be widely embraced first by the SMB world and gradually moving up into the Global 2000 (though that might take years). In the meantime, it's time to figure out the value of this stuff, and not accept it based on hype nor reject it out of fear. It's simply another way of doing something better and cheaper, and that's all good.

Application integration and service oriented architecture expert David Linthicum heads the product development, implementation and strategy consulting firm The Linthicum Group. Write him at david@linthicumgroup.com.The notion that an enterprise can run entirely on SaaS sends many traditional software folks running for their Red Book IBM manuals, and rocking back and forth muttering "Say it's not so. Say it's not so." However, there are some small businesses out there that are approaching the state of SaaS-only operation, and many companies are sure to follow.

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