Software as a Service (SaaS) is cheaper, quicker and easier
than traditional on premise applications. Right? Well, certainly
according to the advocates of the on-demand computing movement it
is. You can also switch a SaaS application off if you do not like
it. You are not committed to a multi-year implementation process
that you cannot back out of, so what is to stop any organisation
just diving in and having a shot at SaaS?
The theoretical answer is nothing, although the real-world
answer might carry more caveats. Forrester Research carried out a
study of
customer relationship management (CRM) deployments, which
included SaaS roll-outs, for its report "Best practices: the smart
way to implement CRM". What the analyst firm found was that there
is a need for planning and piloting with SaaS just as there is with
traditional application roll-outs. "With more frequent upgrades,
faster deployment, lower upfront costs and high acceptance by
employee end-users, customer demand for CRM SaaS applications shows
no signs of slowing down," concluded Forrester analysts William
Band and Peter Marston, but added, "Successful implementation and
integration requires that you follow sound practice."
These are fairly standard practices, ones that can be carried
over from the world of on-premise software. Why are you doing the
implementation? Do you have a business case in place? Do you know
what you want to get out of the deployment? How will you measure
success or failure? When considering cost, have you taken into
account more than just the up-front monthly rate? What about
software licence fees, internal labour implementation costs,
professional service fees, user training expenses, mobile and
offline/online system access, industry-specific functionality,
storage capacity fees and premium help desk support? Do you have a
tough enough set of
Service Level Agreements (SLAs) in place?
One company that has considerable experience of SaaS deployment
is Textron, a manufacturer of helicopters, aircraft, fastening
systems, tools and components, and a provider of financing tools,
which has adopted
SuccessFactors as the company standard for on-demand employee
performance management. Textron embarked on its deployment as far
back as 2001, making it a veteran among SaaS users of any supplier
in any business category.
While the number of enterprises deploying SaaS is increasing,
seven years ago they were few and far between. "Perhaps it was
brave of us," says Will Roth, director of organisational
development at Textron. "SuccessFactors did not have large
customers at the time and certainly not any that you would have put
in the same league of complexity as us. We were rolling it out
across a dozen business units. We had the choice of going to a
boutique shop who could come up with something that would be close
to what we wanted up-front, but then you would have the issue of
how you maintain that going forward. If you go to the leadership of
the company and tell them how much this thing is going to cost if
you run it internally then you are lying to them because you do not
really know."
That said, cost and ROI were factors in making the move to SaaS
for Textron. While some analysts have questioned whether SaaS
return on investment (ROI) is viable over a certain period of time,
usually pinned at around five years, Textron's seven year SaaS
engagement does not bear this out. "We saw ROI in the first year,"
says Roth. "You have to think about the number of people we would
have had to put on a project like this ourselves. Hardware itself
is not the cost the problem is the people you have to have people
out there maintaining your system. That is where it gets so
intricate. Every time you want to add a new feature, you need a lot
of people. You cannot easily put a definitive number on what it
costs to do this sort of stuff internally. You do not have to be an
actuary to realise that there are human resources costs beyond that
of the person working for you. Some of that stuff lives longer than
the application itself."
There are of course now many more SaaS providers than there were
seven years ago when Textron began its investment. Roth advises
that anyone thinking of taking the plunge should consider a couple
of factors to eliminate unsuitable suppliers. "A supplier can have
a product that is not quite as good as others, but two things will
make it suitable," says Roth. "Security was one thing that we
looked at. If you are doing any of this stuff you really do have to
look at security. It is one of the most important filters when
choosing a supplier. Three quarters of the possible suppliers will
not pass examination of security credentials. There are a lot of
suppliers who have internet applications, but when you do a bit of
digging then they do not have the right level of security. Customer
support is another factor that differentiates suppliers.
SuccessFactor's CEO was fanatical about customer responsiveness and
support. He created a culture in his company about this. I was
almost scared that when SuccessFactors got to a certain size then
they would not have that anymore, but he has managed to keep it in
place."
Textron chose not to go through an extensive piloting period for
the SaaS roll-out. "We actually went big bang," says Roth. "We did
do a very small pilot with a very small group of people. I am not
sure I would even call it a proper pilot. The idea was not to
stagger the roll-out. We looked at 50 people using the system. It
is easier to get the feedback you need by using real world users
than by using test users. We then went with the whole enchilada. If
we'd rolled it out one business unit at a time then everyone would
have told me that they were somehow different from everyone else
and needed something special. We are still rolling out features, so
we are not that much different to new customers in that respect.
Again we are doing a small pilot, but come December we are to go
with the whole thing again. If you plan it slow, it is going to go
slow. The best return on SaaS is going to come from having everyone
on it."