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Monday, October 09, 2006

SaaS: Issues, Adoption & Future

I wrote a brief note for sandhill on the adoption of SaaS within enterprises. Software as a service (SaaS) is actually becoming a more widely talked about term in the technology circles, of late. Clearly, the interest in the SaaS model is growing, with a number of specialist areas like CRM, HCM, Billing vendors beginning to show early signs of succeeding due to their well defined focus of their offerings. It's becoming increasingly desirable in most cases and fashionable in some cases for enterprise vendors to look at/offer SaaS as a delivery option, at least in a limited way. This is not a wholesome shift - not as yet. Early adoption results indicate that the adoption of SaaS is clearly beginning to transcend targeted market segments - from SME's to large enterprises, SaaS adoption is clearly showing a rising curve. No doubt established enterprises are definitely worried about the ideas like multitenancy and business users bypassing the mighty IT department to get things done. The active roles played by storage vendors and hardware sellers to CIO's are helping the fight of the CIO in efforts towards bringing the software in-house. The biggest risk that can hurt these advances could arise from a mismatch between the hype, adoption and actual benefits. To be fair, it is still not a settled issue whether the TCO calculations of SaaS are better than on-premise applications. Even in the case of simple(as in less complex) applications deployed across the enterprise and accessed by multiple users, cost benefit comparisons between the models are still a matter of debate and inference. There's also a lingering feeling amongst business users that buying cheap may not be necessarily the best option - particularly in a fact changing technology arena. A clear trend on cost benefits when using the SaaS model is yet to emerge. As a result, the usage driven subscription cost of SaaS applications can tilt the tables and hence the cost advantage scenario looks somewhat blurred. Read more here.

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