Time is Right to Consider SaaS and Cloud Computing

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If there is a silver lining to our current economic crisis it’s that it should force IT and business decision makers to thoroughly reevaluate some of their fundamental operating assumptions, and encourage them to adopt new strategies and solutions which can have a positive long-term impact on their organizations.

There are already plenty of reports that corporate executives are making severe cutbacks in their operating budgets and planning layoffs in response to today’s unprecedented financial climate. Industry analysts are also expecting IT budgets to be reduced and capital spending to slow.

However, successful businesses and IT organizations will not be those who sit on their hands and wait for the crisis to pass. Instead, it will be the ones who find new ways to perform their day-to-day duties and achieve their strategic objectives.

There is plenty of room for improvement in the way businesses procure and utilize technology and software applications. Analyst studies have found that a third of enterprise software deployments fail to be completed, and those which are completed typically cost twice as much and take twice as long as originally planned. And, once the software is deployed many organizations discover it is not used as much as expected because it is not user friendly or the organization over-provisioned their software licenses in anticipation of usage levels – which never materialize.

Numerous analyst studies have also found that most IT organizations spend 75-80% of their time simply keeping their systems and software up and running. This leaves little time to focus on strategic initiatives or innovative projects.

During past economic downturns, many companies decided to outsource their IT operations in order to focus their energies on their core business. Unfortunately, industry studies have found that well over half of these outsourcing deals failed to achieve their business objectives and were either terminated or significantly restructured.

Given that many organizations are in the midst of their annual budgeting and planning cycles in anticipation of the new year, it is a good time to take a close look at how you are currently operating to determine if it is the right time to make some significant changes.

For instance, it is a good time to shift your IT spending from your capital budget to your operating budget by adopting Software-as-a-Service (SaaS) and cloud computing solutions.

These ‘on-demand’ alternatives to traditional on-premise products allow customers to acquire software functionality and computing resources on a pay-as-you-go basis, which eliminates the upfront costs and tremendous risks associated with traditional software and system purchases.

In many cases, these on-demand solutions provide a ‘try and buy’ option which allows you to try out the solution before you make a purchase decision. When can you do that with traditional software and systems?

These SaaS and cloud computing solutions are not only timely from an economic standpoint, they are also better suited to respond to the rapidly rising demands of today’s more dispersed workforce and changing workplace.

Legacy applications and systems are unable to properly support a growing proportion of workers who are doing their jobs remotely from home or on the road because they were designed to sit within a highly centralized computing environment behind the firewall. SaaS and cloud computing solutions were built to be distributed via the web and permit highly dispersed workers to utilize them simultaneously. This encourages better communications and greater collaboration.

SaaS and cloud computing are also ‘green’. They enable companies to reduce their data center investments and allow employees to reduce their time commuting. While reducing our carbon footprint is good for society, leveraging shared services is also good for corporate wallets.

Skeptics are still concerned about the reliability, flexibility, security and scalability of SaaS and cloud computing solutions. The reality is that most SaaS and cloud computing providers have better performance records than in-house IT departments.

While you might not be able to customize a SaaS solution to your heart’s content like traditional enterprise applications, you won’t have to wait months to get the SaaS solution to work and meet your organization’s basic needs.

Scan the most recent stories of security infractions within enterprises and you’ll find they involved attacks on legacy applications not security violations of SaaS or cloud computing services.

And, there are a growing number of deployments of SaaS solutions within large-scale enterprises, including a 200,000-seat rollout of Workday’s human capital management (HCM) solution at Flextronics.

The best measure of the success of SaaS has been THINKstrategies’ customer surveys, in conjunction with Cutter Consortium, which over the past three years have consistently found over 90% of SaaS users are satisfied with their on-demand applications, plan to renew their subscriptions and use additional SaaS solutions, and would recommend SaaS to others.

As a result of these high satisfaction ratings, an increasing number of IT professionals are exploring how they can not only satisfy their business units’ needs with SaaS solutions, but how they can also address their own IT management requirements with SaaS and cloud computing alternatives.

If you are not considering these alternatives, you are doing your organization a disservice and could be putting your job in jeopardy.

Kaplan is Managing Director of THINKstrategies (www.thinkstrategies.com), an independent consulting firm focused on the business implications of the on-demand services movement. He is also the founder of the SaaS Showplace (www.saas-showplace.com) and Managed Services Showplace (www.msp-showplace.com). He can be reached at jkaplan@thinkstrategies.com.