Software as a Service: A reality check!

Reading the customer success stories of Salesforce.com and the apparent potential of SaaS (Software as a Service), we recently undertook a project to examine whether and how SaaS could be helpful to our company. Incidentally, unlike most of the poupular tech and management 3 lettered jarons, SaaS is a four letter acronym!

On closer examination of the concept in the current form and our business environment, we came up with the criteria and a quantitative model to decide whether and which business processes & requirements could we support using SaaS. Some of the critical criteria are as listed below:

1. Integration requirements: Does the software system need to be integrated with multiple back-office systems? Adopting SaaS is alot easier, if system has minimum or no integration requirements.

2. Software changes / customizations: Do the business requirements supported by the applications are subject to change very often requiring frequent changes and enhancements to the software? If initial as well as the post implementation frequency of system changes / enhancements is less, then possibility of adoption of SaaS is high.

3. Confidentiality of data: Does the business policy of the company or regulations mandate application data to be guarded and protected within the four walls of company or demand special or extra-ordinary security measures in maintaining the data. SaaS may not be adopted in such environments.

4. High Availability / Mission criticality: Is the system mission critical or of strategic importance requiring 99% plus uptime? Enterprises may not want to depend upon an external service provider for such applications?

5. Total cost of ownership: What is the extent of initial investments? What is the is the total cost of ownership? Many concepts do not take-off in organizations as initial investments are high and hence ROIs are difficult to justify. SaaS could be a good option for such systems.

6. No. of users: What is the likely number of users in the organization? Relatively low number of users coupled with high initial investments may force organizations to consider SaaS?

7. Nature of software application: How would you classify the software: Core (OS, RDBMS, Application Server) / Infrastructure (BPMS / Rules Engine/ Portal / KM / BI system) / Business Application (ERP / SCM / CRM) / Business Support Software (MS Office / E-mail / Calendar)? Non-mission critical Business Application software and Business Support software could be easier to adopt as SaaS.

After critical evaluation, we could hardly conclude in favour of SaaS for some of our strategic initiatives such BPM & Imaging, Core Insurance system upgrade, Claims Management System, or Business Intelligence System. Despite the aggressive push and over-optimism by SaaS enthusiasts, I feel SaaS is long way away from becoming a key factor in impacting enterprise architectures.