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SaaS: Probably worth a look, despite the overwrought pitches

Not more than 48 hours seems to go by here without another press release on some new Software as a Service (SaaS) offering that promises to make life a heck of a lot easier for midmarket CIOs. As a reporter, I’m a bit skeptical of just about anything that comes via a public relations firm. It doesn’t help that the pitches, both on paper and in person, include words like solution. As in, “The new solution from company X will help midmarket IT departments…” 

Yeah, I get it. By using the word solution, you imply that this product is the only fix for an otherwise unbeatable problem. Thing is, if I understand why they’re using that word, the purpose of using the word is defeated. A magician whose tricks are exposed isn’t a magician. He’s just a hack with a cape and saw. All that said, the recurring line that SaaS products cut down on installation costs, infrastructure and staff time does make sense. SaaS folks, with a little prodding, will generally admit that these products do limit customization. But for a smaller midmarket shop, that may not be a problem. It may even be a blessing, helping to restrain the urge to customize something into an overdetailed, unusable mess. 

And it does appear that CIOs want this stuff. I spent some time on the phone last week with George Jaquette, vice president of product management at Intacct, which makes a financial management SaaS. The spring 2008 version of the product doesn’t bring anything astounding to the table. Talking with Jaquette, I left with the impression that this was a competent product that probably does exactly what it is supposed to do. He did hit pretty hard on the fact that Intaact has two backup centers, in San Jose and
Philadelphia. That seemed meant to soothe any concerns about having important data stored on someone else’s servers.

But here’s the part of the conversation where I really became interested: Jaquette says 70 percent of the company’s current customers have signed on in the last year. Self-promotion, yes. Manipulation of data? Possibly. But I doubt the guy would straight-up lie. I’m ready to take SaaS at face value. The concept has gone beyond trend, and although the market seems flooded with soon-to-be also-rans, some real leaders will emerge to match the few that already have, like We’ll continue to report on this and will even produce a SaaS All-in-One Guide in the coming months that will package all the relevant information potential SaaS buyers will need. 

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Hi Zach - A nice read. So what, if any, tech sectors do you think are on the right path with SaaS? I work with an analytics - BI SaaS company called [A href=""]LucidEra[/A]. What are some metrics - which I'll open up to the community - to gauge a successful SaaS company on? OK SFDC has customers, great they win. But I mean is massive SaaS adoption coming from finance? BI? ERP? Where are CIO's at mid-market comanies comfortable deploying SaaS? With their Sales Ops information?(LucidEra is hoping so). Finance? Spend management?
I honestly couldn't pick one industry over another where SaaS adoption is having broad adoption right now. I think a big part of this will be seeing what companies do as they decide it is time for a change in infrastructure. Most midmarket companies aren't going to phase out legacy systems, be it ERP or a sales op information program like LucidEra hopes to replace, until they absolutely have to. So this will take time. Check out [A href=",289142,sid183_gci1301840,00.html"]this story[/A] to see how even a big-time vendor like SAP has been slow out of the gate with its new SaaS offering, Business ByDesign. As for metrics, that's a tough one. The easy answer is customers. But since so many SaaS programs sell by seat, should we be measuring the number of companies using a product or the total number of users? And come to think of it, even that wouldn't be a great measuring stick. After all, another measure of a good SaaS product could be how well it works in companies with only a handful of users. Concerning Salesforce, I mention them because they have some key factors in achieving success. Name recognition and partners (in a sense, at least). I notice that LucidEra has a "for" tab on the website. Intacct was pretty pumped about the connection as well. If smaller vendors are in a rush to say they work with, that's some form of success. Anecdotal, of course.