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Cloud Computing with SaaS Commentary
September 3, 2009 at 6:17 pm #79624
Cloud Computing with Software as a Service (SaaS): How It Is Changing the Business and Organization Today
By Stephen C. Hawald
In today’s most massive global economic turndown since the Great Depression, there is a vision to help guide organizations from the typical unaligned business abyss to rapidly aligned business deployments of Software as a Service (SaaS), also known as Web services using cloud computing. Instead of organizational budgets being bogged down with technical infrastructure, IT project overruns, high-cost help desks, data integration, etc. – the daily IT blocking and tackling – new resources may be freed to up to focus on the actual mission of the business. SaaS allows the CIO or the business unit to buy Web services on demand and by the user seat. No longer limited to a single application, SaaS is now available to full-blown enterprise resource planning (ERP) applications. SaaS with cloud computing is here to stay and will become more actively used and integrated into the enterprise business processes, impacting the organization from top to bottom.
SaaS with Cloud Computing Defined
When a major disruptive change arrives on the IT scene, it is not always clear what the implications will be. Large organizations tend to have a wait-and-see attitude when considering what such a deep change in IT services may have on ROI. Cloud computing is quickly beginning to shape up as one of these major changes. SaaS has proven to be a universally accepted and trusted service to access application functionality through a browser without the need to own or install costly hardware or software. Usually, limited if any IT support staff is needed for SaaS and cloud computing. The data is stored securely off site “in the cloud” and end users get the functionality they need with none of the IT burden.
Understanding and Acceptance of SaaS in the Business Place and Organization
Most businesses are struggling to understand what this disruptive technology shift means for the organization and its workforce. Given that most organizations need to hold the budget line or reduce spend to keep the profit targets in check, business functions and IT budgets are taking large cuts. In making these decisions, executives are looking to:
* Reduce operating budgets for internal and external services that can be eliminated or scaled back
* Find new services and outlets in the global economy to outsource more non-core back-office operations to be more efficient with the supply chain
Executives must apply different thinking now on how to deliver the organization’s products and services with less “sunken capital” and fewer annual expenses. It is at that point where the SaaS model wins, because the process of rapid prototyping and rapid implementation is infinitely easier in a SaaS model than an on-premise model.
Will SaaS with Cloud Computing Affect the Business and Organization?
Any time business processes are changed, a new dynamic comes into play on the business and organization. It exposes impacts on:
* Technology services and delivery
* Business processes including workflow
* People and organizational readiness, also known as organizational change management (OCM)
The technology will keep business users much more up-to-date on the state of the organization, including sales and business operational and financial data for revenue and profits, budgets, and individual performance metrics. This data will enable the organization to make better decisions and take appropriate action. The “big thing” is to increase the sales, profits, and business efficiency of the supply chain with the end result being customer delight.
Up until now, people have used a variety of computing devices in their professional lives, including desktops, laptops, handhelds, and smart phones. Each new device was essentially an island of capabilities – applications, communications, rich data, and content.
Today’s SaaS with cloud computing means that information is not stranded on individual machines in a fixed location; it is combined into one digital “cloud” available at the touch of a finger from thousands of different devices. However, there is still a great deal of work to be done to get all these technologies functioning seamlessly and reliably. Tech companies have shifted many of the software applications that businesses typically handle for themselves over to the cloud, but many more have yet to be switched over. In addition, organizations need increased reassurance that their data and communications will be secure and the new services will be available whenever they need them.
Repeatable business processes with high quality and minimum errors is the foundation of the SaaS business model. The startup costs for a SaaS business are usually high and it takes time to develop the organizational discipline that the model mandates. However, once those milestones have been reached, the SaaS model is more predictable and friendlier to investors and stockholders than the on-premise IT model. The “big thing” for the organization is to apply SaaS and cloud computing, because it is one of the few models to perfectly align business and technology for the goals of the customers (external and internal) and the software vendors in delivering a quality, functional and field-tested solution. Because SaaS operates in only a single environment state, the need to support a multiplicity of different configurations does not exist. Therefore, that means internal IT support positions can be scaled back or eliminated. This helps the CIO reduce the overall corporate IT budget so that IT is free to focus on incorporating new business functionality.
If a customer is dissatisfied with SaaS, the subscription is simply cancelled. There is no huge sunk cost to recover. Conversely, the fact that the SaaS vendor needs to sell his services every day to customers means that great service and customer delight becomes a differentiator and the vendor’s success is well aligned with the business success.
The shortcomings spell opportunity for plenty of companies in tech. For example, an executive could use the technology to pull together information about customer complaints and product dissatisfaction from a variety of sources.
This is one of those turning points where small companies can explode onto the scene while industry giants miss out. One factor that puts some tech giants at a disadvantage is that companies born and raised in the consumer world are leading the shift to a more personalized approach to computing. One of the most promising aspects of cloud computing is that it enables the creation new services like so-called “virtual personal assistants.” These software confections “know” people’s interests and are capable of doing useful things for users on the Internet, like suggesting a restaurant for a client meeting. Silicon Valley is having an IT development field day with SaaS and clouds. Startups everywhere introduced a new great service that places sophisticated artificial intelligence (AI) in an easy-to-use form. The first applications are designed to help users to arrange travel and entertainment, but the development of powerful tools specifically for business is anticipated.
On the other side of the coin are some awesome benefits that can potentially change the game for many firms that are willing to be very proactive in managing potential downside. These include the ability to rapidly scale and operate IT applications and systems more cheaply than previously possible. Cloud computing offers easier change management of infrastructure, including maintenance and upgrades (cloud vendors extensively virtualize and commoditize the underlying components to make them non-disruptive to replace and improve) as well as improved agility to deploy solutions. Cloud computing also offers an on-ramp to new computing advances such as non-relational databases, new languages, and frameworks designed to encourage scalability and take advantage of new innovation.
Key Organizational Lessons Learned and Best Practices using SaaS with Cloud Computing
Here is a list of 12 key practices and lessons learned:
1. Let the business executives drive the SaaS decision; it is primarily a business play
2. As with any other major change in business processes, operations, and capital projects, use program management disciplines when adopting SaaS with cloud computing
3. Use a project pre-check framework before executing and deploying SaaS project
4. Look for a SaaS that can solve a business pain point quickly and cost effectively
5. Evaluate the ROI, business process workflow, and results for realization at a mid- point review
6. Don’t lock the organization into a single vendor
7. Have an exit strategy if one SaaS needs to be swapped out for another one
8. Collect and analyze key metrics on performance, customer satisfaction, and efficiency monthly
9. Move to dynamic budgeting so that the SaaS can be picked up during any point into a budget year
10. Understand that SaaS with cloud computing needs to have a well- executed organizational plan to take your workforce on this new journey for the right results and outcomes
11. SaaS with clouds will continue to morph, become stronger, ubiquitous, and more secure, enabling more organizations to use and share the services, data, and workflow
12. Update your Enterprise Architecture (EA) on the business architecture (BA) process view for how and where SaaS is integrated in your end-to-end business process models
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