As promised in my last article, these are my own Top 10 reasons why organizations should adopt SaaS/On Demand solutions:
1. Focus: It goes without saying that companies do the best when they operate within their organization's core competency. By getting rid of distractions an organization is better able to focus on its unique value-add. An analogy - all companies use electricity but none make it.
2. Reduced Costs: SaaS solutions have a much more attractive investment profile. Almost all SaaS solutions start with moderate up front investment that enables your return to grow with your investment versus having to capture it back over 18 - 36 months.
3. Leverage Best Practices: Most SaaS solutions have evolved to encompass best practices through the volume of experience gained by interacting on a particular business process automation problem. An organization is infinitely better off leveraging this expertise and adapting its execution to embrace it. Extensive customizations are like a ball and chain - they are heavy and no fun to carry with you over time.
4. Time to Value: Return on investment is comprised of three items. Investment - cash out to reach some goal. Return - value back. Time - time it takes to start getting your return. Since SaaS solutions are packaged and ready to use, there is a much shorter window until the returns start. i.e. no infrastructure to build = quicker time to value.
5. Solution Consumability: Change is an attribute of life - do it or become extinct. Too big of a change, too fast or too little too late and you are toast. Highly packaged SaaS solutions are ideally suited to the evolutionary approach - take a step and then adapt to environmental conditions.
6. You Don't Know What you Don't Know: Heaven and Hell are in the details. No one is an expert in an area without living it. There is always complexity hiding under the covers as projects scale.
7. Accountability: Who would you feel more comfortable holding accountable - your internal IT organization - part of which just got outsourced - or a company that is in business to solve your problem?
8. No Shelfware: We have all heard the horror stories from the 90's - millions of dollars of value setting on the shelf - consuming a solution as a service eliminates this risk.
9. Pain Avoidance is Good: If everything went as planned there would be no need for management. Suffice it to say - it does not. So where do you want to spend your valuable organizational bandwidth? Avoiding a task avoids the pain associated with its growth and development. I don't really care how the car works - as long as it takes me where I want to go.
10. Simplicity! A packaged simple to use service is always better than purchasing the parts, putting it together, and maintaining it. KISS - Keep it Simple Stupid!
There were several excellent Top 10 lists on various topics associated with SaaS. These are the lists I found particularly useful:
1. Bessemer's Top 10 Laws for Being "SaaS-y"
2. Top 10 SaaS Traps: Watch Out For Hidden Snags
3. Crownpeak Challenges Top Ten SaaS Myths
KISS principle - "Keep it Simple, Stupid"
I don't know who came up with this pearl of wisdom, but it has certainly been a guidepost for me over my career. The idea of removing complexity to improve execution works. More parts means more parts to break, manage, and maintain. Less parts - the converse.
But what do you do when the simplest incarnation of a solution is complex - i.e. the fulfillment of Einstein's maxim "everything should be made as simple as possible, but no simpler."
In this situation a person/company is faced with a dilemma- embrace the financial and resource obligations of the complexity or punt! If handling complexity is your organization's core competency - no problem. Resources, organization, and experience can enable the management of even the most complex problems. If not, you are in for a world of hurt and will be pushing the ball, a heavy one at that, up hill.
I call this the Tyranny of Complexity
Let's take an example from our business lives - ENTERPRISE SOFTWARE! Over the past 20 years - these solutions have continued to grow in size and complexity in order to handle an ever expanding set of requirements. With the proliferation of the web, several infrastructures have evolved to provide the transaction handling that these systems require. These systems generally require load balancers to direct users, web servers to provide security, application servers to handle transactions, database servers to handle data storage, and a SAN to store information. Now let's throw a dose of redundancy and site back-up for mission critical systems and you have one big, complex system that will take an army of IT people to keep operational.
Enter SaaS (Software as a Service)!
Wiki Definition: A model of software deployment where an application is hosted as a service provided to customers across the Internet. By eliminating the need to install and run the application on the customer's own computer, SaaS alleviates the customer's burden of software maintenance, ongoing operation, and support.
My Definition: Getting the benefit of a solution without the hassle.
Taking complexity, packaging it as a service, creates simplicity, enables execution, and liberates value creation.
Why Adoption Now
Certainly getting benefit without hassle is analogous to mom and apple pie - it's all good. But why are these solutions only now gaining traction?
Jeff Kaplan, an analyst and consultant with THINKstrategies, was recently quoted in the article "Web 2.0 for business class" at siliconvalley.com:
"What's happening is a crossover. People have discovered the ease of use of Web-based services in their personal life, and it's made them more comfortable with using these services in the corporate world."
I think that there is one additional point that is fueling the transformation of software solutions to services. Not only are people comfortable with ease of use - but they are also now comfortable with its security. FUD, "fear uncertainty, and doubt," is a powerful demotivator.
Familiarity drives the elimination of FUD. By using SaaS solutions such as online banking and commerce safely in our personal lives, we collectively gain comfort and provide points of reference for rapid adoption.
Small Business vs. Fortune 500
One of the biggest misconceptions about SaaS is that it's only a small to medium business solution. Pundits are confusing adoption patterns, Individual -> Small Business -> Large Business with solution appropriateness. Because the level of referenceability required at each level of adoption escalates, it takes traction at lower levels to enable the larger organizations to adopt.
In fact, I would contend that today's large organizations are in even more need of a SaaS solution than their smaller counterparts. Typical large companies have:
- Extremely large and complex solutions
- Global Bureaucracy
- Outsourced IT
- Limited resources to deploy outside of their core competency
Short of a government, there is no more complex institution than a large business. Everything associated with the deployment of a business solution at this scale is complex, expensive, and hard - hiding that effort in the cloud and amortizing it over many parties is the path to success.
The larger the organization and the more complex the solution, the more pressing the need for SaaS - without the simplification these services provide, your organization will be buried under a burden it is not equipped to handle.
While working on this article, I was unable to find a decent Top 10 list from a large organization perspective on why to adopt SaaS/On Demand solutions. I'll be back soon with my own Top 10...