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 don't like
it. You're not committed to a multi-year implementation process
that you can't back out of, so what's 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 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 vendor in any business
category.
While the number of enterprise SaaS deployments is increasing,
seven years ago they were few and far between. "Perhaps it was
brave of us," says Will Roth, director, organisational development
at Textron. "SuccessFactors didn't 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 which 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're lying to them because you don't really
know.
That said, cost and return on investment were factors in making
the move to SaaS for Textron. While some analysts have questioned
whether SaaS 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 return on investment 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 isn't the cost the problem is the people you have to have
out there maintaining your system, that's where it gets so
intricate. Every time you want to add a new feature, you need a lot
of people. You can't easily put a definitive number on what it
costs to do this sort of stuff internally. You don't have to be an
actuary to realise that there are HR costs beyond that of the
person working for you. Some of that stuff lives longer than the
application itself."
Of course, there are 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 vendors. "A vendor 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're doing any of this stuff you really do have to
look at security. It's one of the most important filters when
choosing a supplier. Three-quarters of the possible vendors won't
pass examination of security credentials. There are a lot of
vendors who have internet applications, but when you do a bit of
digging, they don't 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 wouldn't have that anymore, but he has managed to keep it in
place."
Textron chose not to go through an extensive pilo ting period
for the SaaS rollout. "We actually went big bang," says Roth. "We
did do a very small pilot with a very small group of people. I'm
not sure I'd even call it a proper pilot. The idea wasn't to
stagger the rollout. We looked at 50 people using the system. It's
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're still rolling out features, so
we're not that much different to new customers in that respect.
Again we're doing a small pilot, but come December we're to go with
the whole thing again. If you plan it slow, it's going to go slow.
The best return on SaaS is going to come from having everyone on
it."