In the beginning there was
customer relationship
management (CRM). After years of costly implementations of
applications that delivered poor return on investment (ROI) and
left unused licences gathering dust on IT departments' shelves,
software as a service (SaaS) allowed companies to pay for
applications on a monthly subscription model, access them via a
commodity Web browser and to pay for as much or as little as you
needed, scaling up and down the number of seats.
Chief among the early evangelists was Salesforce.com, which
specialised in
sales
force automation (SFA) and annoyed market leader Siebel, which
itself
made a short-lived SaaS pitch with Sales.com. Around the same
time, Oracle CEO Larry Ellison funded the launch of NetSuite which
combined CRM with back-office enterprise resource planning
(ERP), while elsewhere
RightNow Technologies offered its own SaaS customer service to
complement its on premises offerings.
"CRM/SFA being the first major area where SaaS blossomed helped
to establish a level of user acceptance of and comfort with the new
deployment concept," reckons
China
Martens of analyst firm The 451 Group. "CRM/SFA was a
comparatively safe place for customers to experiment with on-demand
and assess its appropriateness. It was also an area that they could
move out of relatively easily if SaaS wasn't working for them,
although that's probably less true now. The SaaS delivery model is
popping up in every single kind of application from ERP,
particularly HR, to business intelligence (BI), to supply chain
management to security-as-a-service applications. It's like any
application, vendors now have an additional box to check: 'What's
your on-demand strategy?'"
For their part, CRM/SFA firms Salesforce.com and NetSuite are
expanding the SaaS ecosystem by encouraging third-party firms to
develop applications that will run on top of their own platforms
through the Force.com and N-BOS initiatives respectively. "Our
strategy is to enable third parties to build verticalised versions
of NetSuite to solve specific business problems related to
agricultural dealer equipment, for example, or electronics
distribution or computer resale," says NetSuite CEO Zach
Nelson.
Salesforce.com CEO Marc Benioff comments: "Our users have
created 44,000 custom applications. It's amazing what they are
doing: they are modifying the system to make it just for them.
They're creating new SaaS applications that we didn't even dream
of."
Early examples for this in action include Coda, which has
developed a SaaS version of its financial products using Force.com.
"There's a whole untapped market for on-demand accounting
software," argues Jeremy Roche, Coda CEO. "On-demand is becoming a
much more acceptable and appreciated way to deliver and consume
software. The next breed of financial director will grow up with
Facebook, and GoogleApplications and so on. Companies will entrust
accounting systems to the Cloud."
What's more interesting is that a new breed of SaaS supplier is
emerging that addresses other critical areas of enterprise
business. These include Workday and SuccessFactors in the HR and
Talent Management markets, Zuroa in the billing and invoicing space
and LucidEra in the business intelligence (BI) sector. Some of
these are in early days mode (such as Zuora) while others are the
proverbial best kept secrets - SuccessFactors boasts the largest
SaaS implementation in the world.
"The enterprise business is our bread and butter," says CEO Lars
Dalgaard. "Nokia Siemens Networks, one of the world's largest
network communication companies with 60,000 employees, is rolling
out integration performance for alignment and compensation in 97
countries. Another great story is CadburySchweppes where we helped
the company drive alignment for 11,000 employees in 10 languages in
business units in Europe, the Americas and Asia/Pacific."
Zuora is an interesting example of the new breed of SaaS
supplier in that it has been partly funded by the CEO of one of the
original SaaS firms, Salesforce.com's Benioff. Zuora is a SaaS
billing and invoicing firm that came to attention earlier this
year. Early adopters include web analytics firm Coremetrics which
uses it to manage 27 different pricing models, but Zuora's services
can be used at any company with a subscription-based business
model. "The idea of SaaS is growing like a weed," says Zuora CEO
Tien Tzuo. "Two years ago people were a bit sceptical, but there's
been an epiphany. Our goal is to create a market, not just to
service an existing market. We are trying to do what Amazon and
eBay did for online retailers. That is the business model of the
future."
There are similar ambitions at LucidEra, a providers of
on-demand business intelligence. "Our ultimate goal is to be to BI
what Salesforce.com is to CRM and all kinds of transaction
applications," says Ken Rudin, CEO of LucidEra. "Traditional BI has
been very complicated to deploy and maintain. I've said that BI
stands for 'bloated integration'. The focus for us is simplicity.
We want to offer people analytics that are simple to set up and
use."
So has SaaS broken free of its CRM/SFA origins to become a
viable enterprise delivery model? Perhaps the last essential
endorsement came with the arrival of
SAP and
Microsoft to the party. Both can be kindly described as
reluctant converts to the SaaS cause, but both have ticked what
the on-demand box (although neither has matched their theoretical
commitment with deliverable product in the UK). But their embracing
of SaaS may be the final push needed for sceptical CIOs to cast an
eye over on-demand alternatives to traditional applications,
especially as the credit crunch takes a hold.
"It may sometimes be less about on-demand being cheaper in the
long term, but more about flexibility in terms of easier
customisation or reuse or easier integrations," concludes Martens.
"We also see interest from customers in having the ability to move
between on-demand and on-premise applications. If that preference
becomes widespread, it could be interesting times for SaaS pure
plays."
SaaS in the Enterprise: Human Resources, Talent Management
The Allianz Group is a global insurance, banking and asset
management services provider, with 180,000 employees worldwide,
which faced a challenge in matching talent demand with supply and
managing talent quality and risks. To tackle this, it has begun
deploying a SaaS solution called SuccessFactors 360 Review which is
based on the Allianz competency model and Succession Planning
modules across all 65 operating entities.
The choice of deploying a SaaS approach was taken for business
reasons. "We didn't look at this from an architecture point of
view, it was about focusing on functionality," says Brenda Leadley,
head of Group Human Resources at Allianz. "The criterion was how
well it would meet our business needs. It was the SaaS
functionality that won us over."
But Leadley concedes that selling the idea of SaaS involved a
degree of internal evangelism. "There was some resistance at first
from the IT department, but they have now bought into it for what
we use it for," she says. "The idea on the business side is that we
will use SaaS much more comprehensively as we go forward."