Talk about taking off: The percentage of companies using software as a service climbed 13 points in just 11 months, from 47% in our 2010 survey to 60% this year--one of the biggest adoption increases we've seen for any technology category in such a short period. The roster of SaaS providers set to take on giants like Microsoft, Google, and Salesforce.com has grown as well. In our 2011 survey, when we asked about SaaS vendors being used, we received more than 60 write-ins across just about every functional IT area, in addition to our list of a dozen big-name vendors. Such a rich applications landscape was the stuff of dreams just a few years ago.
But that doesn't mean SaaS is a no-brainer for companies to adopt. Many of the 275 business technology professionals responding to our InformationWeek Analytics 2011 SaaS Survey, all of whom are involved in their companies' enterprise applications strategies, express concern about features and functionality. Integration is still a big problem. Perhaps most significant, in tandem with the jump in SaaS use over the past year, overall satisfaction levels took a dip. In our 2010 SaaS Survey, 85% of respondents said SaaS met or exceeded expectations. Now only 74% feel that way. Still not a bad percentage, but can SaaS vendors arrest this downward momentum?
So what's driving SaaS uptake? Speed to implementation pulled away from other drivers in our 2011 survey. As businesses struggle in a slowly recovering economy, they put a premium on providing new applications quickly while minimizing up-front investments.
One of the biggest complaints we hear about SaaS is the inability to share data with other on-premises and as-a-service applications. No one wants to go back to the bad old days of data silos, but the very nature of the SaaS architecture makes this a real risk. Take CRM. Once a prospect in your system becomes a customer, you may want the contact information stored in the SaaS application to pass to a number of other enterprise systems, or even to another SaaS provider. This list may include billing, order fulfillment, and help-desk applications.
More than half our survey respondents--55%, a five-point jump from last year--say they've integrated SaaS applications with internal applications. But it's far from easy. If you're considering using SaaS e-mail, such as Microsoft Exchange, you may not be able to integrate it into your Active Directory. If you're also using a second SaaS provider for SharePoint, you'll have yet another set of credentials with policies around passwords that may not comply with your enterprise guidelines.
When looking at cloud brokers, consider these key points: Can they integrate into your in-house applications, or just with other cloud systems? Are all your apps supported, and if not, can you connect oddballs using open APIs? How is the broker delivered: appliance, in the cloud, on-site software? How robust is the workflow orchestration engine? How about reports to monitor transactions, compliance, governance, and performance? How is licensing constructed--per user, transaction, server/CPU? Spend too much on integration and you negate any savings.
5 Steps To Stay Up And Running
Even as they ship more IT functions off site, companies haven't left the concept of five nines behind. CIOs must have backup plans in place for all SaaS important or mission-critical apps--and fully 87% of respondents rate their as-a-service apps that way. Steps to take:
>> Classify the types of data you need to back up, either to your site or to a cloud-based backup provider. The SaaS vendor should give you tools to extract this data without requiring support from its staff. If you work with multiple SaaS providers, consider deploying a cloud service bus or other orchestration tool to streamline this process.
>> For cloud-based backups, ensure the vendor can honor your data retention and restoration policies. How long do you expect the SaaS vendor to retain the backups? What recovery points are available? If a user requests a restoration, how long will it take? These are all critical considerations to ensure you won't get burned by data loss.
>> Build a new skill set. Instead of spending time keeping servers up and commodity applications healthy, IT must now manage vendors and configure, integrate, and become custodians of valuable data trusted to outsiders. Get skilled at partnering with business managers to ensure that SaaS fulfills the promise of lower costs and higher speed.
>> Decide up front who's responsible for what. If you thought internal finger-pointing was a time suck, wait until you're arguing with a SaaS provider and an ISP over why the CFO's financial system is down.
>> Don't skimp on performance management. SaaS metrics take the form of key performance indicators and operational-level agreements, as well as SLAs. To measure and tie application services back to these metrics, SaaS performance management is critical.
Vendors used by more than 10% of companies in our survey include ADP, IBM, EMC, Google, Microsoft, Oracle, and Salesforce, with IBM and ADP showing the largest gains and Salesforce the biggest drop. But the most popular vendor was "Other," with a full 42%. This illustrates the diversity in SaaS.