SaaS: Red Light, Green Light

Here's how to drive your software-as-a-service initiative beyond standbys like CRM--without getting into dangerous territory.

InformationWeek Staff, Contributor

April 17, 2008

3 Min Read

In light of the expanded decision points we've discussed, how enterprise-ready are today's most popular SaaS options? Here we'll discuss two fairly well established enterprise apps. For coverage of online data backup, spam and e-mail virus control, and network monitoring, click over to our Special Report. Sales Force Automation, CRM
Major Players: Microsoft, NetSuite, Oracle, RightNow Technologies, Yes, that's a yellow light. One of the most popular SaaS applications, all things related to automating the sales process, seems like a perfect place to test the concept. Sales forces tend to be far flung and not very disciplined at following a standardized method of sales information management. Sage, Salesforce, SAP, and a host of other well-funded operations have been preaching the benefits of outsourced sales processes. However, implementing CRM is never easy, despite the maturity of this category. Gartner reports that 65% of enterprises will fail to effectively align their organizations with targeted customer and financial outcomes. Why? Because CRM requires changing and standardizing the most nebulous part of most companies--the sales team.

When you're talking budget, this challenge plays in favor of SaaS vendors. The lower up-front investment in a hosted system lessens the cost of failure. Plus, the template-driven style of most hosted apps can help you work through the development process more quickly. This doesn't mean the project will fly, of course, but it may make a failed SaaS project less painful.

There are multiple profitable CRM vendors with ample cash and long track records. There has been some consolidation--for example, RightNow's acquisition of SalesNet--but these services have been in production for several years. Tools, data security, and customization options vary, but most have a well-developed base set of functionality.

You'll need to dig in with the vendor on the bandwidth impact at the home office. Linking back-end customer data with your sales force is a critical task that will impact traffic to your internal data center.

Payroll And Expenses
Major Players: ADP, MasterCard, Paychex, Workday

Nearly one in three respondents to our InformationWeek reader survey uses a SaaS vendor for payroll processing, and most payroll processing vendors are steadily migrating away from internal applications to a hosted model. The major vendors are well-known and have solid track records. All have extended their offerings from simple payroll to time tracking, screening services, and HR services.

While most companies can easily move their basic payroll and time-reporting functions to SaaS, here's a cautionary note: This segment lags in support and development of back-end integration tools and kits for exchanging data. A large education client we spoke with had success with basic payroll and time tracking but scrapped plans for SaaS-controlled performance reviews, candidate screening, and additional HR tools because of the high cost of back-end data integration.

Michael Healey is CTO of GreenPages Technology Solutions, a national IT solutions provider. Write to him at [email protected].

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