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COVER STORY: OPINION■
By Fergus Gloster, senior vice-president (EMEA),
Salesforce.com
A RECENT conference in Dublin heard that a third of and executive vice-president of Saaspoint, many firms
traditional software projects fail. CIOs in large organi- are missing out on the benefits of SaaS because they
sations are under increasing pressure from business think that integration with existing legacy systems such
units to deliver usable technology more quickly. As as Oracle, SAP or Sage is impossible or overly complex
markets slow, business users can ill afford to wait and time consuming. But, he says, SaaS applications
around for 18 months while an on-premises software vendors have a better track record of maintaining
development is rolled out. Speed, ease of implementa- stable APIs than do the legacy on-premises vendors. He
tion, no capital investment costs and rapid return on points out that not only can CIOs retain their legacy on-
investment have been the driving force behind the premises software but they can also enhance its usabil-
growth of Software as a Service (SaaS). But can it deliv- ity and adoption. The traditional headaches around
er to enterprise the benefits it has demonstrated across integrating and making software upgrades
SMEs? I believe there are four great myths when it compatible are eliminated under the SaaS model.
comes to enterprise implementation of SaaS.
Myth 4: SaaS is not for enterprise application
Myth 1: SaaS is only for SMEs developers
A recent report from Saugatuck Technology found that According to Linthicum, enterprise architects must
only 4pc of large enterprises (5,000-plus employees) are plan for SaaS. “Many Global 2000 enterprises could find
not planning on deploying SaaS. that 20-30pc of their enterprise applications are SaaS-
McKinsey & Co reported 62pc growth in enterprise delivered and need to function like any other enterprise
SaaS adoption between 2005 and 2006, while Gartner system, working and playing well with others – users,
finds that on-demand applications now represent legacy systems etc.” Meanwhile, Beagle Research Group
between 25pc and 40pc of the ¤220bn software industry. points out a major reason why SaaS has infiltrated the
Gartner estimates that SaaS adoption in enterprise will enterprise, suggesting the traditional software para-
increase by 20pc per annum through to 2011 and will digm is in serious trouble. “Application development has
more than double to US$11.5bn by then. These esti- become complex and expensive to the point that it pres-
mates are borne out by real enterprise users such as ents a serious impediment to business growth,” it says.
Japan Post, which has 65,000
salesforce.com subscribers, One of the drivers for SaaS becoming central to
Merrill Lynch (25,000 users) and Dell (40,000 users). enterprise application is that it releases CIOs and their
developers to innovate. As the research company CXO
Myth 2: SaaS is only for CRM Media points out: “Too often, IT departments are infra-
Michael Ybarra, author and monthly columnist for structure mills, with most of their resources bound up
SearchCIO-Midmarket.com, comments that the SaaS in the rote exercises of maintaining hardware, patching
model continues to win adopters because of its speed software, tuning databases and running backups.”
and ease of deployment. While the most popular appli- A study by IDG Research Services with CIO Magazine
cations continue to be human resources, collaboration subscribers in March 2007 found some 80pc agreed that
and CRM, more companies are also looking at the on-demand allows IT to focus more on innovation and
model for enterprise systems as well. less on infrastructure. Half of all surveyed said it is crit-
David Linthicum of consultants ZapThink has been ical for on-demand software to serve as a platform for
talking about the SaaS-only or SaaS-majority enter- new application development and deployment.
prise for some time now. “In essence, it’s a new or exist- Saugatuck Technology puts it best: “SaaS is expand-
ing business that has most or all of its critical business ing well beyond its early low-cost, easy-to-deploy, niche
applications – and data – delivered on-demand. While application roots to become an important business
this scares the hell out of most IT shops, the courageous computing force that is fully integrated with broader
and innovative organisations using internet-delivered enterprise architectures. SaaS is growing up and going
applications and services are finding huge benefits.” global, with an increasing focus on core financial and
human resource management systems of record – not
Myth 3: It’s hard to integrate SaaS with legacy systems just on the early poster-child solutions categories such
A Forrester survey found that integration was the most as CRM, sales force automation and collaboration.”
common reason why tech execs shied away from SaaS. SaaS could indeed be the catalyst that finally transforms
However, according to Frank McCracken, a founder the CIO into an enterprise’s chief innovation officer.
September 2008 Knowledge Ireland 35
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