SaaS Evolution Keeps Enterprises On Their Toes

On-demand software hasn't supplanted or caused a wholesale replacement of on-premise software, but it is making its market in particular ways.

PALO ALTO, Calif.--Software-as-a-service (SaaS) is finding its way into enterprises in unique ways and having its own special impact on how business is done.

That was the consensus of four panelists here at the AlwaysOn OnDemand conference, hosted in HP's Palo Alto, Calif. headquarters. All four have their own on-demand software firms and shared their experiences in dealing with enterprise customers.

By default, not design, most companies are a hybrid integration environment, with data behind the firewall but also data sitting in Salesforce or SuccessFactors. The quandary for these companies is how do you mash that data up for business, said Quentin Gallivan, CEO of Pivotlink.

The other emerging trend is that SaaS and business intelligence (BI) have formed a hybrid model and allowed for new functionality that traditional apps could not do before, said Gallivan, who cited the extension of analytics to enterprise supply chains as one important example. The outdoor sporting goods equipment chain REI extends its reports to vendors, so vendors selling in REI get daily reports on how things are selling.

"You could never do that in a traditional on-premises world," said Gallivan.

About 60 percent of the customers for SaaS are the IT department. "They see us as an augmentation model, so we've embraced this augmentation model. We market directly to IT. We're your augmentation strategy. You don’t have to throw out Cognos, don’t have to throw out Business Objects. But if you have apps you just can get to, we'll come in and take care of that. We'll be part of your BI competence center," said Gallivan.

But he added that there has been a shift in who is using BI. "The power shift is moving from IT to the business user. It might be a VP of marketing or someone in the supply chain, and they can't wait weeks or months to have deep analytics in the supply chain. They need it immediately," he said.

SaaS has always been pushed as the more economical alternative to on-premises software, but that's not always the case.

Craig Basin, CEO of EasyAsk, described a scenario where a company liked what they saw— particularly the ability to end months of backlogs on reports and redeploy engineers on new tasks—but balked at the $185,000 up-front cost. "That's a tough check to write today," he said. "When the SaaS model price points come down, sales will go up."

Adam Slutsky, CEO of Mimeo, noted that SaaS started with tech firms, who got the concept quicker than other industries. "It's global, huge supply, huge demand, it's where innovators are. Once someone starts working with a remote resource, and it works, they say why not more people?"

Because of these immediate financial benefits, there is more outsourcing of work on things like documentation and tech writing and quality assurance.

Slutsky said he has also noticed another trend carrying over from the eBay world: seller ratings.

"Buyers can make good decisions based on previous work history," he said. "All this transparency and visibility enables the provider of services to build their online reputation and get paid what they are worth in the global economy, and it enables to buyer, an employer, to make a much more informed decision or at least have insight if you want to hire someone with much more transparency than ever before."

Andy Patrizio is a senior editor at, the news service of, the network for technology professionals.

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