A Sketchy Track Record
SaaS vendors claim it's easy to install and deploy their offerings because customers aren't required to invest in infrastructure or fork over a large licensing fee. But that can be a double-edged sword when deployments circumvent IT entirely. After all, what's stopping the vice president of human resources from signing on with an HR application from the likes of Authoria Inc. or Taleo Corp. without telling anyone in IT?
Both CIOs and vendors caution against leaving IT out of the picture, however. "For midsized organizations, SaaS won't be successful if the lines of business look at it as a way to go around IT," says Colleen Smith, director of Software as a Service at Progress Software in Bedford, Mass. "There can be some downsides of SaaS from an IT perspective -- service-level agreements, access controls related to security, backup availability, integration. If IT is standing back and not a part of making a SaaS decision, then the company is going to lose."
Both Newby and Woolwine say SaaS decisions should always be vetted by IT no matter how easy they are to deploy and fund. "SaaS applications have to pass the IT rigors of decision making," Woolwine says, particularly in the security and integration areas.
Other issues likely to crop up include support and problem resolution. Even if IT doesn't procure and pay for a SaaS application, chances are the department will be called in when trouble arises. And IT shouldn't first learn about a SaaS application running loose in the company only when the software fails.
Like traditional software vendors, SaaS vendors fail, too.
Both Bell of Phoenix Technologies and Barstow of Bandwidth.com say the worst thing about losing Salesforce.com was the sense of helplessness. "Every application has outage time," Barstow says. "What makes it more painful is that you have no control when it comes back."
Even worse, Salesforce.com is a granddaddy in the SaaS market. So what does this say about the reliability of new vendors, asks Majestic's Woolwine. "My problem with SaaS is that there are a lot of new vendors that don't have a track record, particularly in this industry," he adds. "I still wonder whether SaaS is just ASP with one more letter."
To mitigate risk, Phoenix Technologies regularly grabs snapshots of its customer data. When the company initially lost Salesforce.com last December, Bell says static versions of data were available. Likewise, Barstow says Bandwidth.com downloads all its support tickets at least twice a day. Even though it's read-only, the data is better than nothing.
While outages do happen, it's a vendor's response that makes the difference. As SaaS vendors scrap for new customers -- mostly among midsized companies -- CIOs stand to gain better service and support from the fierce competition. Most traditional software giants, on the other hand, are wooing the midmarket but still wedded to the larger enterprise.
Case in point: When Salesforce.com's service temporarily came to a halt, Bell e-mailed the company's CEO, Marc Benioff, and received a return call from him. Benioff explained why the system crashed. "I've had many outages with Oracle and Microsoft," Bell quips, "and I've never gotten a call from Larry Ellison or Bill Gates."
Megan Santosus, a former senior editor at CIO Decisions, is now a features editor for SearchDataCenter.com. Write to her at firstname.lastname@example.org.
This was first published in October 2006