Will 2008 be the year of SaaS?
We’ve been talking about SaaS for a long time, so it could be that it is entering fad status. There are articles everywhere about Using SaaS for ERP and CRM, but the licensing has still not caught up.
Organization’s perspective and acceptance of SaaS as a cheaper and more agile method to deliver value seems to be on the increase. SaaS should allow large companies to leverage leading edge business application capabilities immediately, without the same level of understanding in-house about the technical complications upgrades or concerns about IT infrastructure demanded by traditional software delivery approaches. It should free them up to think about what differentiates them from the pack.
There seem to be claims that SaaS will cure everything that’s wrong in an organization’s IT. There have even been efforts to create support groups for SaaS consumers. All of these seem a bit fad like to me, but there is always a hubbub of activity around the kernel of value for any fad.
For those businesses that choose to go it alone, the combined costs of hardware, software and skilled technical staff can be a real drag on profitability. Add in the cost of ancillary (but critical) functions such as disaster recovery and backup, and the total cost of ownership can quickly become burdensome.
But a hosted services model slashes up-front investments as well as ongoing service and maintenance costs, putting top-tier software solutions within reach of even very small companies.
All this activity, however, doesn’t mean the SaaS wave is poised to engulf traditional licensed software. SaaS’s share of the business application market today is more like a drop in the bucket. And enterprises have been slow to embrace SaaS, raising objections over reliability and availability.
Yet the arrival of the big enterprise-software guns, the emergence of integrated business communities in the cloud, and increasing desperation on the part of IT to minimize application deployment and maintenance hassles, suggest that SaaS is on the verge of much faster adoption.
By contrast, CRMIT and other SaaS providers incrementally swap in new functionality, streaming new innovations to all customers at once, keeping the UI as consistent as possible.
Yet the main attraction for SMB customers — letting a service provider shoulder the burden of software deployment, maintenance, and availability — can be a showstopper for large enterprises accustomed to maintaining full control. Not to mention that the huge cost sunk into existing CRM or ERP licenses becomes a whole lot tougher to justify.
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