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Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
Liz Herbert Analyst Forrester Research
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Liz Herbert Analyst Forrester Research

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  • 1. March 31, 2005. Call in at 12:55 p.m. Eastern Time Liz Herbert Analyst Forrester Research ForrTel: Using Software-As-A-Service To Gain Power Over IT
  • 2. Theme Software-as-a-service puts control into the hands of business users
  • 3. Agenda <ul><li>What is SaaS? </li></ul><ul><li>Advantages and disadvantages of the SaaS model </li></ul><ul><li>How SaaS empowers the business user </li></ul><ul><li>Trends in software-as-a-service (SaaS) </li></ul><ul><li>Recommendations for user firms interested in software-as-a-service </li></ul>
  • 4. What is SaaS?
  • 5. What is Software-as-a-Service? <ul><li>Subscription-based software </li></ul><ul><ul><li>Pay as you go </li></ul></ul><ul><li>Low risk </li></ul><ul><ul><li>No large, upfront license fee (since you rent instead of buy) </li></ul></ul><ul><li>No hardware required </li></ul><ul><ul><li>Software vendor manages the infrastructure </li></ul></ul>
  • 6. How does SaaS differ from managed hosting? <ul><li>SaaS </li></ul><ul><li>You rent the software </li></ul><ul><li>Pay-as-you-go, subscription-based pricing </li></ul><ul><li>Software vendor takes care of the infrastructure </li></ul><ul><li>Upgrades are automatic and seamless </li></ul><ul><li>Managed Hosting </li></ul><ul><li>You own the software </li></ul><ul><li>You pay a large license fee upfront </li></ul><ul><li>You pay a third party to manage the infrastructure </li></ul><ul><li>You worry about when to upgrade and how to upgrade </li></ul>
  • 7. Advantages of SaaS
  • 8. Reduced need for IT <ul><li>You don’t need to worry about . . . </li></ul><ul><ul><li>Hardware </li></ul></ul><ul><ul><li>Database support </li></ul></ul><ul><ul><li>Scalability </li></ul></ul><ul><ul><li>Uptime </li></ul></ul><ul><ul><li>Reliability </li></ul></ul><ul><ul><li>Security </li></ul></ul><ul><ul><li>Platforms (Windows versus Mac) </li></ul></ul>. . . since the software vendor worries about this for you
  • 9. Shorter time to implement <ul><li>No time spent acquiring or testing hardware </li></ul><ul><li>+ </li></ul><ul><li>No time spent installing software </li></ul><ul><li>+ </li></ul><ul><li>Shorter RFPs since the risk is lower </li></ul><ul><li>= </li></ul><ul><li>Implementation times ranging from one day to a few months </li></ul>
  • 10. More frequent upgrades <ul><li>Vendors release upgrades two to three times per year </li></ul><ul><ul><li>Versus once every one to two years for on-premise </li></ul></ul><ul><li>Upgrades happen automatically and seamlessly </li></ul><ul><ul><li>At off-peak hours, without you doing anything </li></ul></ul><ul><li>Upgrades are incremental rather than big-bang </li></ul><ul><ul><li>No need to re-engage consultants </li></ul></ul><ul><ul><li>Reduced (or zero) need for retraining users </li></ul></ul>
  • 11. Additional advantages <ul><li>Easier to do an incremental rollout </li></ul><ul><ul><li>No more shelfware </li></ul></ul><ul><li>Quicker ROI </li></ul><ul><ul><li>Since shorter time to implement and reduced upfront costs </li></ul></ul><ul><li>Easier to use </li></ul><ul><ul><li>Familiar Web look and feel </li></ul></ul><ul><ul><li>Point-and-click tools instead of coding </li></ul></ul>
  • 12. Disadvantages of SaaS <ul><li>More expensive in the long run </li></ul><ul><ul><li>Breaking point usually occurs around year three </li></ul></ul><ul><li>Less control over the app </li></ul><ul><ul><li>Customization and integration capabilities typically more restricted </li></ul></ul><ul><li>Vendor viability becomes even greater concern </li></ul><ul><ul><li>Since vendor controls your software, security, and your data </li></ul></ul>
  • 13. Summary of hosted versus licensed tradeoffs Source: September 27, 2004, Best Practices “Hosted Versus Licensed CRM: Cost And Implementation Tradeoffs”
  • 14. How SaaS empowers business users
  • 15. Business users have more control over the purchase <ul><li>Line-of-business manager, such as vice president of sales, drives purchase </li></ul><ul><li>Subscription model pricing reduces the need for budget authority at the executive level </li></ul><ul><li>Firms don’t have to get IT approval </li></ul><ul><ul><li>Since they don’t need hardware or IT involvement </li></ul></ul>
  • 16. Business users have more control over the app <ul><li>Point-and-click wizards for: </li></ul><ul><ul><li>Setting up users and profiles </li></ul></ul><ul><ul><li>Creating custom fields </li></ul></ul><ul><ul><li>Creating new reports </li></ul></ul><ul><ul><li>Setting up workflows and alerts </li></ul></ul><ul><ul><li>Customizing the layout </li></ul></ul><ul><li> No more waiting for IT! </li></ul>
  • 17. Trends in SaaS
  • 18. What types of apps are firms buying “as a service”? Base: North American Firms (SMBs and Enterprises) Source: Business Technographics ® November 2004 North American Benchmark Study 39.80% 39.50% 35.70% 33.20% 29% Sales force automation Marketing automation Procurement/sourcing HR Finance
  • 19. Which vendors lead the trend? <ul><li>CRM </li></ul><ul><ul><li>salesforce.com </li></ul></ul><ul><ul><li>Siebel CRM OnDemand </li></ul></ul><ul><ul><li>RightNow </li></ul></ul><ul><ul><li>NetSuite </li></ul></ul><ul><ul><li>Salesnet (sales force automation) </li></ul></ul><ul><ul><li>BlueRoads (partner relationship management) </li></ul></ul>
  • 20. Which vendors lead the trend? <ul><li>HR </li></ul><ul><ul><li>ADP, Ceridian, Employease </li></ul></ul><ul><li>Recruiting </li></ul><ul><ul><li>BrassRing, Recruitmax, Taleo, Ultimate Software </li></ul></ul><ul><li>Accounting </li></ul><ul><ul><li>Intacct, NetSuite </li></ul></ul>
  • 21. Where are the vendors focusing development? <ul><li>Vertical specific offerings </li></ul><ul><li>Customization tools </li></ul><ul><li>Integration capabilities </li></ul><ul><li>Internationalization </li></ul><ul><li>Mobile and offline access </li></ul><ul><li>Workflow </li></ul>
  • 22. Recommendations
  • 23. What to consider in your contract <ul><li>Service-level agreements </li></ul><ul><ul><li>System uptime (and the payout for unplanned downtime!) </li></ul></ul><ul><li>Data ownership </li></ul><ul><ul><li>What happens to your data at the end of your contract or in the case of the vendor folding </li></ul></ul><ul><li>Support </li></ul><ul><ul><li>Hours of phone support </li></ul></ul><ul><ul><li>Turnaround time for email support </li></ul></ul>
  • 24. Additional recommendations <ul><li>Form a council to test out solutions and ferret out requirements </li></ul><ul><ul><li>Take advantage of free trial offers from SaaS vendors </li></ul></ul><ul><li>Map tools to business processes </li></ul><ul><ul><li>And don’t rely on app to fix broken business processes; faster to implement can mean faster to fail </li></ul></ul><ul><li>Consider hidden costs </li></ul><ul><ul><li>Add-on modules, wireless and offline, integration can all cost extra </li></ul></ul>
  • 25. Thank you Liz Herbert [email_address] www.forrester.com Entire contents © 2005 Forrester Research, Inc. All rights reserved.
  • 26. Selected bibliography <ul><li>March 16, 2005, Trends “Subscription Applications: Fad Or Future Direction?” </li></ul><ul><li>January 10, 2005, Market Overview “A Buyer&apos;s Guide To Hosted eCommerce Solutions” </li></ul><ul><li>September 27, 2004, Best Practices “Hosted Versus Licensed CRM: Cost And Implementation Tradeoffs” </li></ul><ul><li>September 23, 2003, Forrester Brief “Jump-Starting RFID Initiatives With Hosted Solutions” </li></ul>

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