Software as a service is hot, and we have the stats to prove it: Fully 68% of the 530 respondents to our InformationWeek Analytics2010 Outsourcing Survey use some form of SaaS. And they're happy with that decision. Most say SaaS provided higher-quality results versus internal sourcing, with 37% pointing to the IT nirvana of "higher quality at a lower cost." Forty-four percent plan to expand their use of SaaS this year.
Welcome to the Golden Age of SaaS. We're using it, we like it, and we're poised to bet big that it will continue to deliver benefits.
However, just like previous Golden Ages, there are some real problems that are being swept aside. Railroads had land grabs, TV had Milton Berle, the Greeks had budget problems they still can't fix. And SaaS providers are sometimes guilty of pitching overly simplistic, even downright fanciful, ROI models and assuring CIOs that the service can be "up and running tomorrow." These claims ignore some basic tenets of Economics 101 and gloss over expertise companies will need to acquire when expanding the use of SaaS and other cloud platforms.
More on ROI later. In our experience, more disruptive are skills gaps around integration and vendor management and the need for a more proactive security stance; better monitoring of the overall environment; updated business continuity plans; and an overall data plan that embodies the "enter once, use often" mantra taught in programming.
Yes, CIOs have to worry about all this stuff with or without SaaS. Unfortunately, though, when outsourcing enters the picture, bad habits become magnified.
1. Design Gaps: Interconnectivity
The speed with which SaaS can be implemented is cited as its biggest benefit, and this promise has held fairly true. In most cases, you can quickly get a trial version and start uploading data, whether it's into a CRM, project management, or HR application.
But how well will that app and its data be integrated into your overall infrastructure?
In most cases, the answer isn't pretty. Let's take Web conferencing as an example. Sure, it's boring and basic and mature. Many providers' platforms have existed for almost 10 years, including Cisco's WebEx, Citrix's GoToMeeting, and Microsoft's Live Meeting, while lots of smaller entries, such as Dimdim and Glance, bring innovative features. Web conferencing regularly comes up as the top SaaS application in terms of adoption--it led our 2008, 2009, and 2010 surveys.
So naturally, you've nailed down integration, right?
If you're not sure, answer these five simple questions: Did your team invest the time to integrate the appointment-setting features with your mail and CRM systems? Does the conference software use your global address book? How about the meetings themselves? Are the archives tied directly back to your project management or sales management systems?
And, last question: Did you take the time to integrate the conferencing interface into your Web support system so your clients won't have to uncheck the "and get a free trial of X" every time they do a Web conference with you? IT needs to either offer this level of integration or explain exactly why they've opted not to.
Which brings us to our next point: SaaS adds a whole new dimension to one rogue IT activity that can cripple your network: out-of-control data integration.
Case in point: Salesforce.com has some great options for enterprise-level data integration and some nifty tools for small organizations that want to get some data integration benefits. Business employees want these capabilities, and we've seen cases where IT failed to offer an official path to integration, so users opted for a DIY approach. For example, Salesforce has a neat feature that synchronizes Outlook with Salesforce databases. Cool for a small business, but if you let 1,000 users configure this themselves, you've created 1,000 mini-sync engines banging on your Exchange server, your network, and your connections to Salesforce.
2. Vendor Management
Our recent 2010 report on the business of outsourcing didn't just confirm IT's expanded use of services. It also shined a harsh light on our inability to manage the process. The numbers aren't pretty--30% of companies have fired an IT partner within the last year, with 8% citing catastrophic consequences.
This shouldn't be a shock to anyone. "IT isn't really good at outsourcing," says Terrence Gaughan, senior partner at enterprise staffing consultant DevSelect. "They tend to underestimate the time needed to manage and communicate with any type of outsourced partner. It's not a panacea."
We get that SaaS is really another form of outsourcing. However, unlike a body shop or subbed-out application development project, it includes the technology and associated staff. Take a hard look inward: If you're no good at managing your outsourced help desk or application developers, chances are you won't be any better at managing your SaaS vendors.
IT Service Management Must EvolveThe idea of technology being delivered as a service appeals to the 409 IT pros responding to our Service-Oriented IT Survey. But cloud providers are competing for that work, and CIOs are being selective.