March 31, 2005. Call in at 12:55 p.m. Eastern Time Liz Herbert Analyst Forrester Research ForrTel: Using Software-As-A-Ser...
Theme Software-as-a-service puts control into the hands of business users
Agenda <ul><li>What is SaaS? </li></ul><ul><li>Advantages and disadvantages of the SaaS model </li></ul><ul><li>How SaaS e...
What is SaaS?
What is Software-as-a-Service? <ul><li>Subscription-based software </li></ul><ul><ul><li>Pay as you go </li></ul></ul><ul>...
How does SaaS differ from managed hosting? <ul><li>SaaS </li></ul><ul><li>You rent the software </li></ul><ul><li>Pay-as-y...
Advantages of SaaS
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>...
Shorter time to implement <ul><li>No time spent acquiring or testing hardware </li></ul><ul><li>+ </li></ul><ul><li>No tim...
More frequent upgrades <ul><li>Vendors release upgrades two to three times per year </li></ul><ul><ul><li>Versus once ever...
Additional advantages <ul><li>Easier to do an incremental rollout </li></ul><ul><ul><li>No more shelfware </li></ul></ul><...
Disadvantages of SaaS <ul><li>More expensive in the long run </li></ul><ul><ul><li>Breaking point usually occurs around ye...
Summary of hosted versus licensed tradeoffs Source: September 27, 2004, Best Practices “Hosted Versus Licensed CRM: Cost A...
How SaaS empowers business users
Business users have more control over the purchase <ul><li>Line-of-business manager, such as vice president of sales, driv...
Business users have more control over the app <ul><li>Point-and-click wizards for: </li></ul><ul><ul><li>Setting up users ...
Trends in SaaS
What types of apps are firms buying “as a service”? Base: North American Firms (SMBs and Enterprises) Source: Business Tec...
Which vendors lead the trend? <ul><li>CRM </li></ul><ul><ul><li>salesforce.com </li></ul></ul><ul><ul><li>Siebel CRM OnDem...
Which vendors lead the trend? <ul><li>HR </li></ul><ul><ul><li>ADP, Ceridian, Employease </li></ul></ul><ul><li>Recruiting...
Where are the vendors focusing development? <ul><li>Vertical specific offerings </li></ul><ul><li>Customization tools </li...
Recommendations
What to consider in your contract <ul><li>Service-level agreements </li></ul><ul><ul><li>System uptime (and the payout for...
Additional recommendations <ul><li>Form a council to test out solutions and ferret out requirements </li></ul><ul><ul><li>...
Thank you Liz Herbert [email_address] www.forrester.com Entire contents © 2005 Forrester Research, Inc. All rights reserve...
Selected bibliography <ul><li>March 16, 2005, Trends “Subscription Applications: Fad Or Future Direction?”  </li></ul><ul>...
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Liz Herbert Analyst Forrester Research

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Liz Herbert Analyst Forrester Research

  1. 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. 2. Theme Software-as-a-service puts control into the hands of business users
  3. 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. 4. What is SaaS?
  5. 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. 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. 7. Advantages of SaaS
  8. 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. 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. 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. 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. 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. 13. Summary of hosted versus licensed tradeoffs Source: September 27, 2004, Best Practices “Hosted Versus Licensed CRM: Cost And Implementation Tradeoffs”
  14. 14. How SaaS empowers business users
  15. 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. 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. 17. Trends in SaaS
  18. 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. 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. 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. 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. 22. Recommendations
  23. 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. 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. 25. Thank you Liz Herbert [email_address] www.forrester.com Entire contents © 2005 Forrester Research, Inc. All rights reserved.
  26. 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'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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