Are You Ready for SaaS?

[NOTE: This article is the first of a two-part series.]

Software-as-a-service (SaaS) seems to be everywhere lately, especially in the CRM space. For small and midsize businesses (SMBs), SaaS has been a popular option for a number of years; now larger enterprises are beginning to adopt it in meaningful numbers. SaaS, it can be said, is ready for you, no matter who you are. But are you ready for SaaS?

To know the answer, we first have to examine SaaS in terms of functionality, data conversions, and systems integration. My next column will address two additional considerations: the support models and the economics for SaaS. Overall, a key theme will be the special considerations that SaaS poses for larger organizations.

Definition
SaaS, as many of you know, is Web-based software purchased on a subscription basis, allowing an organization to shift almost all technological responsibility to its vendor. At the theoretical extreme, SaaS requires the customer to do no more than make sure (a) that the end users are getting Web access and (b) that the vendor is getting paid.

Functionality
Whether you're ready for SaaS will depend largely on your organization's functional requirements. While SaaS allows -- and even requires -- its customers to configure the software to meet their needs, the leeway for configuration is often limited. Business processes must be adapted to meet the capabilities of the software platform, substantially more so than is the case with traditional on-premise software. And though SaaS functionality is considerably robust for sales force automation, other CRM applications haven't fared as well.

For SMBs, the overall value to be obtained from SaaS typically far outweighs the costs of being unable to meet any particular functional requirement. For the larger enterprise, the equation is not so one-sided. If the need is for differentiated functionality within the organization, or specialized functionality relative to the marketplace, then today's SaaS offerings might not prove suitable. But if the general need is for process standardization, data centralization, and business intelligence, then SaaS can be a compelling option. (And many CRM users clearly share this view: Witness the recent single-company implementations that will reach into the tens of thousands of end-user seats.)

Data
Your SaaS-readiness will depend on more than just functional requirements, however. Your needs for data conversions and system interfaces are also critical. SaaS capabilities should be entirely adequate -- if you're an SMB. On the enterprise level, though, SaaS tools will still work, but they may present some unfamiliar challenges.

SaaS data-conversion tools are typically wizards that enable data import at the rate of tens of thousands of records per job. If the need is to load, say, five or 10 million records -- not uncommon for larger enterprises -- the task can still be accomplished with a SaaS wizard, but it will take more time and effort than is typically the case with traditional on-premise solutions and their high-powered tools for extraction, transformation, and loading. Rather than planning for a "conversion weekend" prior to go-live, an enterprise deploying a SaaS solution may need to plan for a conversion week -- or more.

SaaS system-interface tools are typically deployed as Web services, and they generally prove suitable to most integration needs, even when melding with a heavy-duty enterprise resource planning system such as Oracle or SAP. That said, SaaS tools may present specific stumbling blocks, such as limitations in scheduling or unforeseen service calls. As with data conversions, the challenges can be overcome, provided they're addressed up front.

Despite the concerns, even larger enterprises are likely ready for SaaS, which can play a valuable role in a company's overall technology landscape. The key is due diligence with regard to functional fit, data strategy, support requirements, and economics.

In that sense, SaaS is no different than any traditional software, on premises or off.

[NOTE: This article is the first of a two-part series. The conclusion, which appeared in the May 2008 issue of CRM magazine, can be found here.]

J. David Lashar (dlashar@us.ibm.com) is an associate partner in the CRM practice of IBM Global Business Services. He recently led a successful 2,000-seat SaaS implementation for sales force automation.

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