Two Tales of SaaS

The roles of SaaS is certainly a hotly debated topic.  I just saw two different views expressed recently.  First, in Red Herring, "Sassing SaaS" describes SaaS as hot, but focuses on its shortcomings.  It talks about the issues around security, customization, interfaces, service levels, etc. making SaaS not appropriate or desirable for certain industries and markets.  Second, in The Intelligent Enterprise Weblog, "Future of Enterprise Software in a SaaS World" describes how SaaS is already reality for many organizations and figures prominently in future buying plans.  It discusses how all the things in the Red Herring article, though important, are not critical issue.  The author argues that it is the acceptance of SaaS by enterprise IT organizations that is the biggest issue in implementing SaaS.

So which is it?  My experience with HCM applications is that only a small percentage of IT organizations are steadfastly against using SaaS.  They are concerned with security, customization, interfaces, service levels and more.  However, if it is the solution and delivery model that best meets the user needs, then they are supportive of it.  I find IT organizations more concerned with trying to leverage their existing applications and to minimize the number of interfaces they need to maintain.  The resistance is around using "best of breed" applications, not SaaS as a delivery model.

What do you think?  Is SaaS over-hyped?  Will SaaS vendors ultimately displace existing providers of enterprise applications?  Will SaaS vendors and traditional enterprise apps vendors continue to co-exist?

Comments

[bkutik]

I'd be interested in your thoughts, Jim, why after HR (at least) has been using hosted Recruiting applications for nine years (perhaps not quite Saas for not running on a single instance), there is all this controversy about whether they are secure, configurable, etc.

[Jim Holincheck]

I think I gave my view that IT folks are not as resistant as one of the articles believes. The concerns are still valid, but by and large, vendors can prove that they can address these concerns.

[Tom O'Brien]

I have to agree with your post.

In the HCM space the end users are somewhat indifferent to the delivery model - if the application meets their requiremts - and their IT organizations are concerned with security, connectivity, performance and continuity.

What the big IT shops definitely try to do is continue leveraging their big ERP systems - providing just enough functionality and support to *box out* any more point solutions.

Tom O'B

[Mohit Mahendra]

I think SaaS delivery, specially for apps that can run stand-alone, provides SaaS vendors an easier, less invasive (from IT's perspective) entry into enterprises that may already have enterprise apps extensively deployed. So they do co-exist. Not yet ready, funtionality wise, to displace enterprise ERP. And enterprises probably not ready to write-off ERP investments of the past decade. So they'll co-exist for a good several years, and hybrid will most likely be the ultimate model that current enterprise apps evolve into.