Interesting post on ZDNet’s SaaS blog about the evolution of the application and the focus on the technology vs. the business results – misleading but interesting:
Whenever customers have to physically implement an application on their own premises, the conversation with vendors always ends up being about the technical features of the product such as performance metrics, compatibility and interoperability. It ceases to be about the original reasons why the business people wanted to automate processes in the first place.
This is what went wrong with packaged application software all those years ago when it first came out, as Rand Schulman, chief marketing officer of on-demand website analytics and digital marketing vendor WebSideStory, reminded me when we discussed this over lunch the other week. When packaged applications first arrived on the scene as an alternative to custom-built in-house sofware, it seemed like they were going to be the ultimate solution to business automation problems. But before long, all the conversations ended up being about compatibility with various platforms, and the business need ended up taking a back seat.
Now, for the first time since that wrong turn the software vendors made all those years ago, on-demand applications are putting business results back into focus. ((Wainewright, Phil, June 20, 2006. “Forget about implementation, focus on results.” Retrieved from http://blogs.zdnet.com/SAAS/?p=173 on July 31, 2006.))
As usual, I can’t say I agree. Premise based implementation do often end up being about technical features of a product. IT professionals need to understand how the installed application will function with the rest of their environment. However, every vendor selection I’ve ever been through has accounted for the functional requirements in a much higher weight than the technical requirements.
Vendor selection done the right way assumes the all of the functional requirements drive towards a desired business result. While I’ll admit that there are probably many vendor selection processes that request cookie cutter functionality because it’s the “in thing” to do, most organizations understand that if they are going to spend that much money on an application, they should plan strategically from the ground up.
I simply disagree that SaaS is putting the business results back into focus. While I agree that SaaS vendors may be in a better position to help organizations drive results based processing, I see no evidence that premise based computing failed.
9 responses to “SaaS: Focus on Results”
systematicHR – Human Resources Strategy and Human Resources Technology » SaaS: Focus on Results
I think the answer here exists between your comments and Wainewright’s. To me, the issue is that the technical tail too often is wagging the business result dog.
The technical realities of traditional software have an enormous impact on the software development, buying and support processes.
Software Development:
When on premise vendors are developing functionality, they are writing code for compatibility with multiple operating systems, database platforms and hardware environments. Their pace of innovation is brought to a screeching halt as they develop, test and optimize their applications across the various technical stacks. This slower pace of innovation often results in sacrifices to the user experience in the race to win their RFP driven feature wars. Multi-tenant SaaS vendors are developing for a single environment – their own. The pace of innovation is accelerated dramatically for those vendors.
The Buying Process:
Vendors and buyers of SaaS solutions simply spend less time during evaluations discussing the technical configuration of features, expertise required to implement and customize the features and the stack configurations need to support the features. This frees up more time during the evaluation process to address issues around desired business results, and it gives the project team more time to revisit the original goals of the project and validate that things are still going according to plan.
The Support Process:
Without the technical burdens associated with on premise software, the vendor and customer have lower ongoing costs for support while avoiding the painful realities of the upgrade process.
It’s simply a question of “Are technical issues a barrier to optimal business results in on premise software?” With SaaS vendors, the question simply isn’t on the table.
Jasen Williams
Employease
Jasen:
Agreed. I think my major problem was with Waineright\’s insinuation (perhaps he said it outright) that premise based computing was a bad move in software. I think it has it\’s place.
Having said that, I agree with everything you said – SaaS does provide an easier platform to select (assuming the vendor is a quality vendor and has built it\’s data center and application architecture the \”right\” way). There are pletny of vendors out there that are caiming to be SaaS vendors but they are really legacy software vendors that have yet to refit their applications to the service models that Employease has in HR, Virtual Edge has in recruiting, and SuccessFactors has in talent. (just a few examples of vendors who I think have done it right).
Does SaaS take away one of the distractions that cause people to stray from strategy? Sure it does. re technical issues a barrier to optimal business results in on premise software? Depends on the organization. It\’s not a foregone conclusion like Waineright would like to think.
-Dubs
My experience working with dealerships (they use SaaS, ASP and premised computing) is that premised computing suffers no worse from the vendor’s perspective than a hosted model when taking into consideration support and computing costs (e.g., bandwidth, drive space), since almost everyone is on some form of modern (2000 – XP) Windows and the vendors simply provide a server to attach to the network (thus controlling platform). On the client software side business software is not so dependent on the underlying system as too be dependent on anything besides working Windows install. Support is definately a grey issue when looked at as a marginal cost to the client as well as overhead cost for the vendor.
In addition, the marginal impact of the IT support staff at these companies is marginal, and as long as the software is well written support costs for both sides are generally low. The advantage is that storage and bandwidth is reduced and directly paid for by the client, and vendor resources are reduced. So, on the development side, if you include infrastructure costs, value is still debateable between SaaS and premise.
On the buying side your point is valid but the impact is less than you imagine. Evaluation and review costs are minimal to implementation costs so the additional marginal time spent will be determining whether a specific option CAN be implemented, as task well suited to IT who can report in summary their findings. Neither side has an advantage in the evaluation of functionality to needs part of the assessment.
In regards to the evaluation of software, I have to agree with Dubs that at the business level whether the software is local or hosted does affect the direction of the conversation. And, in fact, the sentence in the ZDNet post: “…such as performance metrics, compatibility and interoperability.” would have more concern in a hosted environment than in an in-house environment given the additional network hops the data has to go through. So yes, technical issues ARE still prevalent in a SaaS environment, as they are in any environment where technology is used.
Waineright’s post reminds me off the commentary you see daily if you follow “which programming language is best”. For the vast majority of people any number of languages can meets their needs and each has its pros and cons. Stating one or the other is better outside on any context is noise, pointing out the pros and cons and discussing actual use is informative.
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Dubs,
A little behind on the blogging and just noticed your post. I commented on Phil’s post here: http://blogs.successfactors.com/workforce-performance/software-as-a-service/saas_is_about_results/” a ways back. Perhaps predictably, I think he’s hit the nail on the head. It’s not necessarily that on-premise software makes it impossible to focus on business results, it’s just that it requires, to whatever extent, some focus on technical considerations – and also that the technical focus come 1st. After all, without the technical platform in place, there’s no discussion to be had about process whatsoever.
SaaS provides the opportunity to focus exclusively on the business outcomes – configuring real process, not software.
There are many ways SaaS is fundamentally better than on-premise, allowing a singular focus on business outcomes is but one (although maybe the most important one). Faster time to deploy, ease and frequency of updates, 0 maintenance and 0 IT resources are others.
I’d also like to make a point (based on an earlier comment to this post) that is often misunderstood, and probably too large a topic to take on in this small comment window: SaaS and hosted offerings are NOT the same thing. When an application is hosted, the vendor does everything you’d do if you set the system up on premise. The vendor just does it for the customer. Frankly, it’s a form of technology outsourcing, but that’s it.
SaaS is a whole different way of looking at the world. Sometimes the scary technology word “multi-tenant” is thrown around in this context. It means that every customer is on the same platform. It allows an infrastructure of such scale that matintenance, upgrades, security and bandwidth are optimized for every client at the same time. When a bug is fixed, it’s fixed for every client. When a new feature is added, it’s added for everyone. When new security safeguards are put in place, every customer benefits.
Hosted offerings can’t even dream of such things. So for your readers, dig deep when a vendor says its solution is “On-demand.” there are all sorts of flavors of that, and only one, true SaaS, that provides real benefits.
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