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Beyond CRM: SaaS slips into the mainstream

Businesses are taking the plunge into budget-friendly software-as-a-service offerings for everything from recruitment to central ERP.

February 22, 2010 06:00 AM ET

Computerworld - Customer relationship management applications are still the largest segment of the ballooning software-as-a-service market. But the landscape is changing. Pressured to provide faster and better service capabilities while also keeping a tight rein on capital costs, businesses of all sizes are turning to SaaS for everything from recruitment, hiring, workforce scheduling and payroll applications to procurement management and even central ERP systems.

"We never used SaaS before, but we quickly learned the benefits are flexibility and the way you can develop things quickly," says Ginnie Stouffer, vice president of consulting at Wayne, Pa.-based IDC Partners, whose bread-and-butter business is providing remote network management and business continuity services.

For Stouffer, it happened like this: In 2007, IDC Partners secured a large help desk contract from a client who insisted that the consultancy use Inc.'s hosted offering for help desk ticketing. IDC Partners did so and has never looked back, Stouffer says. Since then, it has moved virtually all of its applications to a hosted environment, including disaster recovery and VoIP communications. "There's nothing in our office now but a connection to the Internet and our users," Stouffer says.

One of the greatest benefits, she adds, especially in turbulent economic times, is that SaaS licensing is flexible.

For example, with Internet phone service from Alteva LLC, "we can upsize and downsize just by giving notification," she says. "With other software, if we bought 50 licenses then laid off 25 people, we'd still have 50 licenses."

Sizzling SaaS

Tight IT budgets, the lingering effects of a brutal recession and a pervasive cautiousness in the executive suite over long-term capital investments are no doubt contributing to a growing interest in SaaS.

Early last year, market research firm IDC (not affiliated with IDC Partners) projected a 36% worldwide growth rate for SaaS in 2009. Then the recession hit hard, and IDC revised that figure upward to 40.5%.

Transitioning your IT staff

If SaaS offers so many benefits, why isn't every enterprise using it for every application?

"It's the control issue," says Ginnie Stouffer, vice president of consulting at IDC Partners. "It's a lack of understanding on the customer's side of what they're actually using. They're much more comfortable if they can control the application. It's usually the IT staff that wants to own [applications]."

Schumacher Group CIO Doug Menefee is very familiar with this problem. "In the early days, we struggled with .Net and Java developers [accustomed to client/server software applications] not making the transition easily and not embracing," he recalls.

His solution to that problem was to create a new Web services organization and then hire Web developers, who "naturally gravitate more toward clicks than coding."

"This group typically deploys more solutions in a shorter amount of time than what the on-premises software team delivers. But that's not to say one is stronger or better than the other," Menefee quickly adds. "It's because the on-premises software team has to deal with more infrastructure and licensing-related issues."

Today, the teams peacefully coexist in Schumacher's mixed SaaS and on-premises IT environment.

"Everything here is driven by business requirements," Menefee says. All new applications aren't automatically SaaS-based. Instead, he explains, "whenever we have a business need, we evaluate what our existing architecture is, and we go to both teams and ask them to come back with proposals to address the problem."

— Julia King

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