Evolution to viability the saa s story


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As the economy forces organizations to reduce headcount and cut budgets, IT and business units are being asked to do more with less. In attempting to tackle this challenge, the natural approach is to look at new or yet-completed projects as the first candidates for cancellation or postponement without taking a hard look at what that may do to the ability to meet strategic business and IT goals in the short, mid, and long term. With a focus on Business Intelligence, we’ll take a closer look at some of the initiatives that may require some continued funding in the near-term, but that will result in exponential return in value in the future. Here are 5 things that you can invest in today in order to differ, reduce, and avoid IT cost, and maybe even look like a hero in the process.
• Understand Current State/Baseline BI Capabilities
• Create a Roadmap
• Sunset Mainframe Hardware
• Compile a Sourcing Strategy
• Move to Common Toolsets
• Dabble with Open Source

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Evolution to viability the saa s story

  1. 1. Evolution to Viability, The SaaS StoryWhat is Software as a Service, and should I look at it for MyBusiness?Buzzwords and acronyms within the technology community have been common ever sinceInternational Business Machines became IBM in the 1940’s. Some ‘buzz’ is undeserved and theacronym quietly fades from business circles. Other acronyms are resilient and continue toevolve. Software as a Service (SaaS) is one such buzzword. There is no need within this brief torecount the gloom and doom news being spackled within every business, national, andtechnology news source. By now, everyone has some understanding of the downward costpressures indiscriminately affecting every market. It is this current global economic need toleverage services in order to realize efficiencies while mitigating risks, coupled with the currentphased technical evolution of SaaS that make utilization of Software as a Service an attractiveoption.Components of the aggregate business methods behind the collective Software as a Servicehave been introduced in various forms over the last twenty years with varying degrees ofsuccess. In basic terms, almost all software is able to be positioned as a remotely hosted serviceoffering, and successful utilization of the software is dependent on the underlying infrastructure.Enter the concept of Cloud Computing. Despite all of the hype in technology circles ‘The Cloud’ isreally nothing more than the latest generation in an evolution of what has been known for over adecade as ‘The Net’. As point to point network links have transformed into true grid models, andlayers within the Open Systems Interconnection Standard (OSI) model have become blurredthrough the advent of more intelligent and efficient technologies, making hosted large scalebusiness service offerings a viable option in a truly borderless, global sense has become a reality.As the costs of maintaining systems and services in house escalate, large and mid-tiercompanies that wish to retain their local expertise but reduce the overhead of systems,environmental maintenance, and resiliency are exploring alternatives to a fully outsourced model.Smaller sized companies can also utilize this model for “first mover” advantage and focusing ontheir core business competencies. For many, Software as a Service fulfills that need.TechTarget.com describes Software as a Service (SaaS) as “A software distribution model inwhich applications are hosted by a vendor or service provider and made available to customersover a network, typically the Internet.TechTarget.com further denotes; “SaaS is becoming an increasingly prevalent delivery model asunderlying technologies that support Web services and service-oriented architecture (SOA)mature and new developmental approaches, such as Ajax, become popular. Meanwhile, Page 1 of 5
  2. 2. broadband service has become increasingly available to support user access from more areasaround the world.SaaS is closely related to the ASP (Application Service Provider) and On Demand Computingsoftware delivery models. IDC identifies two slightly different delivery models for SaaS. Thehosted application management (hosted AM) model is similar to ASP: a provider hostscommercially available software for customers and delivers it over the Web. In the software ondemand model, the provider gives customers network-based access to a single copy of anapplication created specifically for SaaS distribution. IDC predicts that SaaS will make up 30percent of the software market by 2007 and will be worth $10.7 billion by 2009.Benefits of the SaaS model include: • easier administration, • automatic updates and patch management, • compatibility: All users will have the same version of software, • easier collaboration, • global accessibility.By now a large portion of the business community has at least a partial idea of what SaaSencompasses and many of us have dealt with situations where the concept is employed andevidenced. Prime examples of this are found within our IT Advisory Services clients whom arelooking for ways to continually meet the growing demands of their business while concurrentlystreamlining IT operations. Examples are found within our Attestation Practice, where SAS70’sare utilized to assist in validating compliance mandates of service providers, often providingsoftware services and various other hosted solutions.More Companies are turning to SaaSSoftware as a service (SaaS) represented approximately 5 percent of business software revenuein 2005 and, by 2011, 25 percent of new business software will be delivered as SaaS, according 1to GartnerAdditionally, Gartner is further cited by Computerworld as stating: “Nine out of ten companies plan to grow their use of software-as-a-service (SaaS) in the next year, according to a survey by Gartner. More than one third of respondents (37%) plan to replace on-premises software with SaaS to drive down total cost of ownership (TCO), Gartner found. Those surveyed cited cost-effectiveness and ease of deployment as primary reasons for adoption. Other major drivers included replacing on-premises solutions that had not met performance expectation, or changes in sourcing strategy. The survey involved eight major countries worldwide and 258 IT executives that make purchasing decisions of enterprise software. Most respondents were either currently using SaaS, or planned to use it within the next 12 months….(and finally)…. Despite the increase use of SaaS, most respondents to Gartners survey said no governance policies had been developed. Only 38 percent of total respondents that are currently using SaaS have a process or policy that guides the evaluation, procurement and deployment of SaaS. The majority of these organizations are based in Europe and North America. 2 Another 26 percent had no plans at all to address this issue.”SaaS concepts have had almost a decade of ups and downs from an adoption perspective mainlydue to the evolution of required supporting infrastructure to provide not only a cost effective, but Page 2 of 5
  3. 3. viable practical option to ‘in house’ systems. In the past there have been failures mainly related tolatency and scaling issues that were often not directly related to the software itself, but rather tosupporting infrastructure and the somewhat limiting linear or ‘spoke’ methods utilized to transmitdata. As has proven to be the case with technology, the delivery methods over the past severalyears there have improved exponentially, which in turn have provided proven ever-increasingsuccesses using the SaaS model for business’ in the areas of: CRM, HR; IT Support, Hosting andSecurity, Accounting and Finance, Video and Bridge Conferencing, Web Hosting and ContentServices, Corporate Email, and even ERP solutions.As it relates to market impact, Gartner asserts: “… said adoption of SaaS varies widely acrosssoftware markets, contributing as little as 1 percent of total software revenue in some marketsand more than 75 percent in others. For example, in enterprise content management (ECM) andsearch, SaaS adoption is in the range of 1 percent to 2 percent of total software spending. Withine-learning and Web conferencing, SaaS accounts for more than 60 percent and 70 percent oftotal market revenue”. “SaaS adoption is highest in applications that support simplified, commonbusiness processes or large, distributed virtual workforce teams,” said Sharon Mertz, researchdirector at Gartner. “Ease of use, rapid deployment, limited upfront investment in capital andstaffing, plus a reduction in software management responsibility all make SaaS a desirable 3alternative to many on-premises solutions, and they will continue to act as drivers of growth.”The following trends are expected with respect to SaaS in the next 3-5 years: • CRM Software as a Service Compared to all CRM Software, by 2011, 25 percent of new business software will be delivered by SaaS. • SaaS Penetrates the Enterprise Market 73% of large companies say they have adopted or plan to adopt SaaS solutions in the next 18 months. The survey polled 100 IT and business executives from Fortune 500 companies. According to survey responses, the most common SaaS solutions were on- demand CRM software. The survey also noted that SaaS growth in the enterprise is 4 being driven by faster implementations, easier maintenance and better pricing. • SaaS and SOA Drive Market Growth SaaS and service-oriented architectures (SOA) are the two most influential trends driving 5 the business application software market . A survey among 850 enterprise sized companies found that 74 % of respondents were “favorably disposed” towards acquiring SaaS solutions, with companies currently spending 19 % of their application software budgets on hosted, subscription-based solutions. The research commentary also commented that “nearly every company – or division of a larger enterprise – is a customer or a prospect for SaaS platforms”. In an interesting merging of the industrys top two disruptive platforms, the study also predicted that while SaaS and SOA were currently on parallel development paths, “we expect them to converge in the future”, paving the way for a “tremendous battle between the largest software vendors and the newer SaaS providers”. • On-Demand Gaining Traction Customers are becoming increasing comfortable with the on-demand delivery model. The cost-savings benefits surrounding software delivered on-demand have resonated with the marketplace and customers are now looking at on-demand delivery of software to help 6 increase employee productivity and efficiency within customer organizations.What about the Risks?At this point in the economy there are several key constraints such as: downward cost pressurescontinue to squeeze IT budgets the business counting on IT still growing capabilities, and Page 3 of 5
  4. 4. additional top line growth. Given these, it is no longer a risky proposition for corporate ITleadership to entertain the idea of integrating SaaS solutions as part of an IT providerstechnology suite of service offerings.Currently, SaaS offers an on-demand, cost-effective, attractive alternative to in house legacysystems that are able to leverage relatively standardized application models and modules. Otherbenefits of a SaaS solution often include hosted continuity and recoverability; reduced staffingand environmental costs, and reduced solution development cycles.From a Risk perspective, there are concerns regarding SaaS solutions specifically as they relateto security, provider maturity, portability of data, and multiple complex dependencies. By designSaaS and Cloud environments utilize shared, leveraged space and bandwidth to enable ondemand functionality, while trying to provide seamless integration and collaboration betweeninternal business groups. These groups maybe utilizing interconnected SaaS offerings often raiseprivacy and multi-tenancy issues. SaaS providers often are either new to the arena, or are start-ups, which add to their maturity and stability risks as they provide mission-critical services. Otherrisks include portability of data, and multiple complex dependencies on other hosting providers ifthe back end infrastructure is not owned by the SaaS provider.What should I expect, and who are the major players in thisspace?What is somewhat unique about this current period in the evolution of SaaS, is that majorsoftware and solutions providers have begun an apparent migration from providing purely EndUser Licensed (EUL) products to a hybrid purveyance model. EUL’s are typically utilized in houseby corporations and business users,. The hybrid purveyance model included localized applicationsoftware, co-hosting said software, and providing remotely managed services utilizing not onlytheir own proprietary base of applications but coupling with competitors application suites. This isdone in order to provide business customers a more practical, remotely accessible, virtuallyseamless, heterogeneous business environment. Further assisting in this growth is the advent bythese same providers of making base platforms available to encourage the construction of, andcollaboration with other external SaaS solutions. The result of these collaborative efforts withinthe realm of technology have served to enable business to choose a virtually ‘platformindependent’ set of business solutions. Ultimately, the result of these multiple, layered, platformindiscriminate solutions is the adoption of what is now a major component of the ‘cloudcomputing’ concept.Among the major vendors that appear to stand out in this area are Oracle, Microsoft, IBM, SAPSalesforce.com, and Google. These would be considered Tier 1 providers that not only provideSaaS enabled applications and services, but also the base platforms for development andimplementation of SaaS solutions, and a solid ‘brand recognition’ in the market.A link to each of their SaaS offerings follows: • Oracle: http://www.oracle.com/technologies/SaaS/index.html • Microsoft: http://www.microsoft.com/serviceproviders/SaaS/default.mspx • IBM: http://www-304.ibm.com/jct01005c/isv/marketing/SaaS/index.html • Salesforce.com:http://www.salesforce.com/ • SAP: https://www.sme.sap.com/irj/sme/en/solution/solutiondetails/index.html • Google:http://www.google.com/apps/intl/en/business/index.html Page 4 of 5
  5. 5. Noticeably missing from the list of expected Tier 1 providers is Novell, mostly due to their limitedcorporate approach and intermingling with the open source community which currently fails toyield a formal, mature, organized approach to SaaS.Another, more traditional and possibly familiar way to look at the placement of SaaS providers isto group them by the type and level of services provided. These groupings would include: • Pure Play: Vendors whose sole service offering model is SaaS, such as Salesforce.com • Software Vendor: Vendors who provide a variety of services, with SaaS being an integral option such as IBM, Microsoft, Oracle • Niche: Vendors which provide a particular type of SaaS offering such as CRM, Host Analytics, Data Warehouse, IDS / IPS, Compliance, Storage, or Email, and • Hybrid: Vendors which provide SaaS platforms, as well as a limited number of hosted services, such as Amazon EC2, Netezza, and Google AppsThe Bottom Line, Our PerspectiveEither way you slice the market, the collective success of vendors is dependent on the ability toprovide the level of scalable adaptability expected by customers businesses as the SaaS offeringcontinues to evolve. When balancing the cost opportunities and the risks to implement much ofthe concern around implementation and utilization of a SaaS solution can be adequatelyaddressed by developing and confirming a Governance model prior to implementation.Regardless the size of a corporations SaaS endeavor, proper Governance should be consideredkey to the success of efforts.In Summary, any IT group interested in streamlining operations, reducing footprint, andcontrolling costs while still enabling the ability for both planned and unplanned growth should, atthis point strongly consider SaaS as a method of fulfilling the increasing demands of the businessit supports. For more information please contact: George Haenisch 1.630.240.2130 @gchjrReferences1. Gartner, http://www.gartner.com/it/page.jsp?id=4968862. ITWorld, http://www.itworld.com/SaaS/58645/gartner-SaaS-grow-90-organizations3. Ebiz, http://www.ebizq.net/news/8346.html4. Kelton Research , June 2008 survey published in CIO magazine.5. McKinsey & Co and the Sandhill Group , 2008 research report.6. IDC report, "U.S. Software On-Demand Delivery Model 2005-2009 Forecast"7. Tech Target: http://searchenterprisedesktop.techtarget.com/sDefinition/0,,sid192_gci1170781,00.html Page 5 of 5