SaaS, SOA and packaged apps: Optimizing your software investments

This CIO Briefing explores the true costs, benefits and challenges of the various approaches to help IT decision makers formulate a software strategy. It also addresses how enterprise IT organizations can make cost-effective decisions about new and existing investments in SaaS, SOA and packaged applications.

This guide is part of SearchCIO.com's CIO Briefing series, which is designed to give IT leaders strategic guidance and advice that addresses the management and decision-making aspects of timely topics. For a complete list of topics covered to date, visit the CIO Briefing section.

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What are the current SaaS hosting options?

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Now that the Software as a Service (SaaS) delivery model has proved itself at the departmental level, some CIOs are ready to go with SaaS for some more complex enterprise applications. And vendors are there to meet them, with services such as integration with legacy systems, custom development and even business process improvement.

As applications like enterprise resource planning (ERP) become available via SaaS, customers' complex business rules often require customization from the standard SaaS offering, said Liz Herbert, an analyst at Forrester Research Inc. in Cambridge, Mass.

   Learn more in "As SaaS model matures, complexity grows, but SaaS benefits hang tough." Also:

• SaaS vs. ASP: Pick the best solution for your company (SearchCIO.com)
  We asked our readers if SaaS is going the way of ASPs. Here's what they had to say.
• More CIOs consider IT managed services to deal with new technologies (SearchCIO.com)
  Forrester Research says the confluence of a scary economy and rapidly evolving technologies will drive explosive growth in IT managed services.
• The Real Niel: SOA has promise (SearchCIO.com)
  If service-oriented architecture (SOA) is our version of mass customization, it makes sense that we learn the lessons that manufacturers have learned when implementing mass customization.

How do you best manage SaaS costs and contracts?

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SaaS contract negotiations are taking on new dimensions as vendors introduce utility-like pricing options and try to lock customers into longer contracts. And by building in support for more customizable applications and creating ecosystems of technology partners for related applications, they are also making it more difficult to switch from one provider to another.

"A lot of SaaS offerings were pretty basic and you had an easier time switching from one to another [until recently]," Forrester's Herbert said. "Vendors are now trying to make it more difficult to switch by making their applications much more customizable." They are also trying to tempt customers into signing longer contracts, in some cases up to five years, by offering steep volume licensing discounts, she said.

   Read more from "In SaaS contract negotiations, focus on customization, future pricing." Also:

• CIOs share SaaS contract advice on pricing, customization and more (SearchCIO.com)
  CIOs who have been down the SaaS road share what they wish they had done differently and what went right with licenses, code in escrow and more in their SaaS contracts.
• Maximizing your application software investments (SearchCIO-Midmarket.com)
  CIOs can optimize their application software investments by revisiting service levels, support and customization options. This can lead to reduced costs and quicker ROI.
• Using SaaS CRM for application integration gives users single sign-on and bigger ROI (SearchCIO.com)
  Learn how a financial services firm modernized system functionality by integrating SaaS CRM with 10 back-end systems in a $250,000 project. The result: time savings, new clients and big ROI.

Which software investments work best through   the SaaS hosting model?

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If you're still thinking about SaaS applications as isolated business processes -- an exotic getaway for a select few of your business users -- it's time to make an attitude adjustment.

Large-enterprise deployments of SaaS will not only touch internal business processes at multiple points in a few short years, according to Gartner Inc., but they will also be deeply intertwined with business process management systems (BPMS) in ways you might not expect.

   Learn more in "Business process management newest SaaS deliverable." Also:

• SOA, SaaS models pair up nicely for Bosley Medical (SearchCIO.com)
  Hair-care company CIO employs SOA philosophy and universal bus to avoid costly customizations.
• SAP ERP on-demand challenge lofty, but not impossible (SearchCIO.com)
  SAP is pushing for 10,000 midmarket SaaS customers by 2010. Can the company pull it off?
• BPM Platform as a Service turns IT shops into SaaS providers (SearchCIO.com)
  A BPM project a minute? Pegasystems offers a twist on BPM, turning corporate IT shops into SaaS providers with a BPM Platform as a Service.

What should I consider when evaluating cloud   computing as a hosting service for my software?

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There are reasons aplenty to stick your head into cloud computing, says Forrester analyst James Staten. IT can't keep up with the demands of the business. The best Web services companies have maxed out their data centers for efficiency, and those babies can handle almost anything you throw at them. You pay by the drink. You are free of long-term contracts. Most cloud vendors let you come and go as you please, Staten said. And all you need to do is log in.

But that doesn't mean cloud computing is enterprise-ready. For your entertainment: 12 reasons, courtesy of Staten and his team, why cloud computing is -- or isn't -- coming to an enterprise near you.

   Find out more about "Cloud computing: 12 reasons to love it or leave it." Also:

• Shifting IT business models in time of economic crisis (SearchCIO.com)
  For CIOs who already budget lean, here are four more places to save. You can stop some projects, reduce service levels, increase levels of risk and, yeah, move to the cloud.
• Cloud computing companies offer new services, architecture (SearchCIO.com)
  Cloud computing is a disruptive force in computing, akin to the revolution ushered in by the Internet. The big vendors are dumping billions into it. CIOs need to pay heed.

More resources

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• Resource center: Enterprise SaaS (SearchCIO.com)
• Resource center: Enterprise SOA and Web services (SearchCIO.com)