With the economy continuing to struggle, many people I speak with in the industry feel optimistic that the Software-as-a-Service (SaaS) business model is holding up well and is, in fact, poised to benefit. If one were to look at the SaaS bell weather, Salesforce.com, it would be easy to support that argument. The problem, however, is that while Salesforce.com is doing well in recent times (despite the gloomy economy) the vast majority of other SaaS vendors are either:
a) Privately held and therefore hard to gauge in terms of "how they are doing", and
b) Are still too young in their evolution...meaning that even if they were growing at a healthy clip in the down economy (ie: double-digit growth), it is hard to tell if "they are doing well".
Also, what metrics would one look at to assess growth for these firms? What might be a meaningful metric to measure some of these firms may be far less meaningful for the others.
Measurements aside, here are some thoughts about why the SaaS Business Intelligence segment should be doing well:
- It's faster to deploy vs. on-premise, therefore, can provide faster business benefit
- It offers a better economic model vs. on-premise....lower TCO
- Customers can "stretch" their existing budgets more (the SaaS model usually means little-to-no capital expenditure) and still get a solution
- An already over burdened IT staff can off load much of the low-value work associated with hardware provisioning, software provisioning, software configuration, database tuning, backups, etc. to the SaaS provider...therefore freeing them to focus on higher-value tasks to support the business
- Some SaaS Business Intelligence offerings are geared to specific functional areas and business problems and can therefore drive some tangible business benefit (ie: Inventory Cost Reduction, Increased Customer Retention, Lower Transportation Costs, Improve Gross Margins, etc.).
These points all make sense to me. If you were to say to a CFO..."you can have a BI solution up and running in 8-10 weeks, with little-to-no upfront investment, minimal disruption to your IT staff, and it would be well aligned to your strategic business initiatives..." why wouldn't he/she not want to give it a try?
Here are some reasons why many organizations are still not making the leap to SaaS BI:
- The SaaS model is disruptive to many of the traditional ways of procuring and deploying software....it's different, therefore, it requires change and a lot of people don't like change
- The "trusted advisors" of many organizations are not recommending SaaS solutions yet because they don't fully understand the benefits and/or they have a vested interest in doing things the old way (meaning they make a lot of money from that)
- Control...the nature of SaaS is that if you are going to use a SaaS solution, a lot of things are no longer going to be in your control
- Trust...you need to take a leap of faith in your provider to trust that your data will be secure, your solution will be available/responsive and recoverable should there be a "disaster"
- Misplaced Fear...Many IT organizations are resistant to the SaaS model because they perceive it will impact job security.
But times are different now (didn't General Motors just go bankrupt?) and doing things the old way may not always be working anymore. Can we afford not to look at new and different ways of doing things?
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