Big SaaS Done Right

These organizations are floating more and more applications into the cloud. They're scaling up, while keeping a keen eye on the risks and rewards.

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Also, with 160,000 employees, the ability of SaaS providers to scale is a concern. "We haven't seen that play out yet," he says.

And Boeing's complex business processes would require extensive customization of any SaaS application. "The traditional SaaS offerings don't support the structure we have today," Colbert says, but Boeing will be better positioned for SaaS as it continues to simplify its business processes.

As the number of SaaS applications in use grows, managing integrations and data flows becomes a bigger concern. "One of the things we're careful about is understanding the integration and what that does to the overall profile of our solutions," says Scott at Guardian. As part of its governance process, Guardian has always had life-cycle methodologies for the software it builds internally. Scott's team extended that to accommodate SaaS. "Having this template to follow, which is predictable, has proved itself and is really one of the secrets to our success," he says.

Some business applications in the cloud aren't up to enterprise standards. "There are certain scenarios that aren't there yet," Greene says. In some situations, the risk profile doesn't match the organization's requirements. In others, the business might need to wait until existing IT investments are fully amortized before investing in SaaS.

Even Guardian is still nibbling around the edges when it comes to moving core ERP applications to the cloud, and Gartner says cloud-based ERP implementations aren't nearly as common as cloud-based HR and CRM systems.

SaaS offerings for core ERP applications are still evolving. "One process I haven't seen in maturity out there yet is core financials," says Greene. McKenzie also evaluated financial service offerings but declined them. "The two major products I looked at were not ready for prime time. Honestly, the market is not mature enough," she says.

Overall, IT executives say their experiences with SaaS providers have been generally positive. "We haven't had one real problem, never a breach or had a vendor go away or bad service or SLA breaches or had to sue anybody," McKenzie says. "Our experiences have been exceptionally good -- so good that we're pushing more and more."

These IT executives say SaaS didn't win out in every case. But Guardian chose that option in 20 instances because the business case made sense and the services were mature enough to meet the needs of a large enterprise in areas such as service-level performance and security. And Guardian had the clout to negotiate favorable contract terms for service levels, limitation of liability clauses, pricing and other requirements.

Every system that isn't a competitive differentiator should be delivered as a service, says Wander, warning that "businesses that fail to pare their legacy architecture may find their core business disrupted by smaller, nimbler companies who have built on SaaS and cloud."

Copyright © 2012 IDG Communications, Inc.

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