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2/26/2009
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Gartner Finds Most-Common SaaS Assumptions Are False

What has made it difficult for many companies to separate truth from fiction is the tremendous amount of hype around SaaS, the analyst firm says.

Gartner has found that three of the top-five assumptions about the software-as-a-service delivery model are false, with the remaining two only half true.

What has made it difficult for many companies to separate truth from fiction is the tremendous amount of hype around SaaS, the analyst firm said.

"A great number of assumptions have been made by users, some positive, some negative, and some more accurate than others," Gartner analyst Robert DeSisto said in a statement. "The concern is that some companies are actually deployingSaaS solutions, based on these false assumptions."

In applying a reality check on the leading assumptions, Gartner found the first to be true: SaaS is less expensive than on-premises software. Because SaaS applications do not require large capital investment for licenses or support infrastructure, they do carry a lower total cost ownership for the first two years. However, in the third year and beyond, an on-premises deployment can become less expensive from an accounting perspective as the capital assets used in the installation depreciate.

Gartner also found the second major function true to a point: SaaS is faster to implement than on-premises software, but only for simple-requirement SaaS. Vendors often tout time frames of 30 days for implementation, but neglect to say that deployments can take seven months or longer.

As the complexity of the business process and integration increases, the gap between SaaS and on-premises software deployments narrows, Gartner found. That's because a larger percentage of the deployment time is spent on customization, configuration and integration, which are equally difficult with both models.

The remaining SaaS assumptions Gartner found to be completely false, with the first being that SaaS is priced as a utility model, similar to electric companies. While many vendors claim to charge only for what's being used, in the vast majority of cases, a company must commit to a predetermined contract independent of actual use.

Also false is the assumption that SaaS does not integrate with on-premises applications and/or data sources. Companies typically have two primary methods available: batch synchronization or real-time integration using Web services. Batch synchronization initially involves loading theSaaS application with data, which later can be incrementally synchronized on a scheduled basis.

A third emerging method involves integrating SaaS applications at the user-interface level through mashups.

Finally, Gartner also found the assumption that SaaS is only for simple, basic requirements is also false. However, there are limits.

SaaS applications are highly configurable at the metadata level with many offering customization capabilities through a vendor-supplied development platform. However, some gaps remain for complex, end-to-end processes requiring complexworkflow or business process management capabilities, Gartner said.

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