Customer Management Articles

So, What Do You Use SaaS For? Three Recommendations on How to Use SaaS

by Rakesh Sharma
Published on 10 May 2011

This one should be interesting!

Research firm Forrester surveyed 1000 IT decision-makers from North American and European enterprise companies with 1000 or more employees to determine their SaaS habits. More specifically, the research firm surveyed them to find out how SaaS is being used and their impression of benefits and drawbacks about the service. The report, titled " The SaaS Market Hits Mainstream: Adoption Highlights 2011″ is available on their website.

Here are some interesting nuggets from the report:

  1. The greatest SaaS usage is in horizontal process areas such as CRM and HR technologies.

Similarly, SaaS is also used for processes such as sales automation, customer support, and recruiting. By itself, this nugget may not mean much. However, I think it might be interesting to note that SaaS usage is highest in cross-functional areas. For example, CRM integrates multiple areas of business such as sales and support to produce a coherent customer strategy. This ties in with one of the major perceived benefits of SaaS: moving beyond silo-centric operations to an integrated value chain.

  1. More and more firms are moving collaboration applications to the cloud by using technologies such as Google Apps, Office 365 and IBM Lotus Notes.

Of course, the move makes sense when you consider that information and workforces are rapidly being distributed across geographies and time zones. However, as I had noted in an earlier post about productivity, large scale adoption of paid productivity applications is yet to happen. Remember, this survey was conducted for enterprises with 1000 or more employees. For a firm that size, scaling from a free version of Google Apps to a resource intensive (and comparatively expensive) productivity application such as IBM Lotus Notes should not be a problem.

  1. According to the report, 53 percent respondents cited lower upfront costs as a key benefit and driver for SaaS adoption.

48 percent also anticipated long term cost savings. These would mostly include elements such as reduced hardware costs, elimination of support fees and resources needed to maintain the application. Cost reduction, obviously, is a strong motivator to shift to SaaS. Tellingly, however, higher level of user and customer satisfaction and an iterative deployment model rank pretty low as reasons to move to SaaS. And, we thought business was all about customer satisfaction!

The report makes three recommendations to SaaS customers.

  1. The first one is to formally assess the return of investment or ROI of cloud application. This is because there are several hidden costs in SaaS, with quite a few of them hidden in service level agreements
  2. In addition, the report also recommends continually measuring usage and value for SaaS. Frankly speaking, this is an area that is wilfully ignored by SaaS advocates. After all, SaaS usage makes sense only when it turns to be cost-effective in the long term. Near term benefits can easily turn into losses in the long term, if SaaS does not work out for you. This is because you will have to re-invest in proprietary silo-specific hardware and software as your organization scales up.
  3. The third and final recommendation for SaaS customers is to plan an exit strategy. The report says that SaaS exit strategies can happen due to customers switching to another option or because of a SaaS failure or acquisition. I would add another reason: scaling up due to growth. As businesses grow, their needs become different and large. Given its current state of infancy, SaaS applications would need to evolve to serve large corporations and businesses to the extent that proprietary applications can.