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6/21/2011
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6 Tips To Maximize SaaS Value

Host Analytics' CFO says the midmarket firm's software as a service overhaul is more about technology sophistication and using tools previously only available to the enterprise than cost cutting.

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When Kelly Battles took the reins as chief financial officer at Host Analytics, she found her new team bogged down by all-too-common issues: Inefficient processes, lack of the right tools, and disconnected branch offices.

"Teams were spread out, had multiple versions of the truth, lots of spreadsheets--spreadsheets everywhere--and very manual processes that were, even though we're smaller, costly, painful, and slow," Battles said in an interview. As a result, the Host Analytics finance team was spending most of its time on mundane fundamentals such as monthly close--or what Battles calls "the mechanics"--rather than helping to build the startup's business. The company has 150 employees across four offices, including one in India.

Here's the kicker: When Battles joined the company in 2009, Host Analytics wasn't really using its own products. Host Analytics makes software as a service (SaaS) applications that it bundles under the header of corporate performance management--think finance functions such as budgeting, forecasting, planning, consolidation, and reporting.

So Battles began retooling both her team and its applications and processes, in the process helping spur a similar SaaS conversion across the organization. Today, the company's only on-premises software licenses are for Microsoft Office; all of its other applications are delivered online. The finance department alone added six SaaS tools within six months--including its own Host Analytics suite, NetSuite for enterprise resource planning (ERP), and four supporting applications, such as Boomi for integration and a payroll system. "For me to be able--with a light, small team--to put in six productivity tools in six months was very powerful," Battles said. Battles compares that with her experience at previous company, in which an on-premises ERP implementation took a full year to complete and required freezing all other technology projects in the meantime. That ERP deployment alone cost $2 million; Host Analytics spends less than $50,000 per year for all of its finance systems combined. Granted, it doesn't have to pay for its own applications, but Battles said annual costs wouldn't cross the $50,000 mark even if it did.

For Host Analytics, there was obviously a better marketing narrative to be had by using its own financial suite; a SaaS developer that doesn't rely on its own platform is kind of like a bakery that won't taste its own cupcakes. But the broader shift to hosted applications was borne out of getting a handle on the inefficiencies and broken processes bottlenecking the six-person finance team's time and brainpower.

An example: The finance department's month-end closing process took at least ten days "in a good month," according to Battles. She notes that industry best practice is considered six days; 10 is average, at best. Post-SaaS makeover, the same process takes four days.

"Finance teams spend way too much time on those mechanics," Battles said, adding that the time gained has been redirected to areas such as analysis, forecasting, and business development-all of which helps debunk the bean counter stereotype of finance professionals. "It allows us to elevate our role and become more of business partner to our executives and our board, and less of a transaction engine."

For the financial junkies: A specific area that the new applications helped optimize was revenue recognition, which it automated with NetSuite. Similarly, Host Analytics automated financial consolidation its own software.

"Most SMBs with revenue recognition issues are on spreadsheets," Battles said. "That's rife with errors, it takes a lot more time, and it's very cumbersome."

It's worth noting Battles title again: She's the CFO, not the CIO or CTO. Host Analytics' internal IT resources are limited mainly to traditional desktop support. The company also has an external services team for its customers, which assisted with the internal adoption of its own software.

"Really, we had no infrastructure or IT support in doing these implementations," Battles said. "The way SaaS is architected, it's configuration--not customization. We are renting software from other companies."

SaaS has swept the company's other departments, too. Host Analytics uses Salesforce.com, for example; it also recently decided to move from hosted Exchange to Google Apps for email. In spite of the consistent savings pitch some vendors make for SaaS and other hosted IT functions, Battles said that it's more about technology sophistication rather than eliminating costs--especially for the "S" in SMB.

"It's about having tools that used to be only available to the enterprise," Battles said. "It's about being more competitive because of that."

Battles offers the following advice for executives and managers--finance or otherwise--pursuing a similar strategy.

-- Have the Right People: "Pause up front and get the groundwork right first. You still need a critical mass of a team to guide this to make sure it's set up right."

-- Have the Right Processes: "Know your processes and policies. [Applications] have to support a process you believe in. If your budget process is in flux, for instance, designing an application around [it] is not a good idea--if you change the budget process, then you have to go re-architect the way you set up the application."

-- Build for the Future: "You don't have to do it all it once, but I think you have to have a good vision [of the future].

-- Take a Prioritized, Phased Approach: "Don't get overwhelmed. You don't have to do it all at once. The beauty of SaaS is that you can launch, iterate, learn, adjust, and then expand."

-- Integrate Key Applications: "The integration step is often missed or ignored as an extra cost that's not needed. To the extent you can pick a few major applications and integrate those, there's a ton of hidden value there."

-- Know What You're Paying For: "I feel like in one of our implementations, we paid too much when we ended up doing a lot of the work." Specifically, Battles means that SMBs should read the fine print in their statement of work and consider what they need versus what they're spending. Don't pay for service hours if you're going to do the heavy lifting yourself--which, in fact, Battles recommends: "You set it up the way you want with full knowledge, and you get trained quickly."

You can't afford to keep operating without redundancy for critical systems--but business units must prioritize before IT begins implementation. Also in the new, all-digital InformationWeek SMB supplement: Avoid the direct-attached storage trap. Download it now. (Free registration required.)

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