The debate around software as a service usually focuses on whether it's better or worse than conventional licensed software. The answer is neither--businesses that have adopted SaaS will tell you it's good for some things and not for others.

But that's only one lesson gleaned from this bigger truth: You can't use the same metrics to assess SaaS as you use for conventional software. To understand SaaS requires a new mind-set.

When IT and business managers shop for software, important attributes include the ease with which it can be customized and how well it can integrate with other systems. But SaaS offerings typically can't be customized, only configured. And integrating SaaS with on-site applications can be more difficult than just integrating two on-site apps, often requiring vendors' help to deal with code dissimilarities.

This doesn't mean SaaS is inferior to conventional licensed software, only that it has different strengths. Many businesses are coming to accept those differences: In a survey of 471 business technology professionals by InformationWeek Research, a quarter of whom are SaaS users, SaaS got high marks for its upgradability, reliability, and ease of use. SaaS users were less enthusiastic about its cost, with only 32% saying they found SaaS affordable. It also didn't do well on customization, integration, and the ability to switch among vendors.

A NEW TAKE ON CUSTOMIZATION
Life Time Fitness health club chain will roll out Workday's human resources software service to its 17,000 employees in early August, following a trial with 600 employees launched last fall. The company had considered customizing on-site software from Oracle's PeopleSoft or Lawson, but went with Workday. "Workday is extremely configurable, but not customizable at all," says Matt Prise, a Life Time Fitness project manager.

Customization isn't part of Workday's business model. Like Salesforce.com, it offers SaaS at a cost lower than conventional software by using a multitenant approach--having groups of customers share one instance of a hosted application, while keeping their data separate.

Life Time was won over by Workday's user-friendly interface, Prise says, plus the ability to integrate the HR service with payroll and employee benefits services that Life Time gets from other providers. The health club chain decided it could live without customization.

Workday, like many SaaS vendors, offers a variety of configurations of its software and solicits input from customers on the features and functionality they want added to updates. Life Time has had "pretty good success" with getting its requested Workday upgrades, Prise says.

Rydex Investments made a similar decision about the importance of customization to its marketing application. Four years ago, it started using Unica's Marketing Central, a marketing resource management software service, as a temporary solution while it looked for on-site software. It settled on a vendor that customized to Rydex's workflow needs. But right before deploying the software, Rydex had to change the customized workflow because of a new law in the highly regulated finance industry. "It became a huge deal to reconfigure the architecture on this new system," says Miyeko Keen, director of marketing operations and services. The lesson learned is that customization isn't necessarily a good thing, Keen says.

Rydex went back to Marketing Central, concluding that the SaaS model of community input into upgrades was better. "If you customize, you're backing yourself into a corner, where you have upgrades designed for your benefit but you don't benefit from the community," Keen says.