SaaS Takes Flight: Web Apps to Take Over the Desktop

By John Brandon Print this article Print

Someday, all software will run online and clunky desktop applications will be a distant memory. See why.

IT workers are revolting.

They want more access to software, from anywhere, and on their own terms. Oh, and they want to use the iPhone and just about any other trendy mobile gadget. This trend of knowledge workers demanding more flexibility is increasing, and IT must respond.

One answer is Software-as-a-Service (SaaS), which offloads the cumbersome chore of versioning locally-housed software to a third-party. Leading SaaS vendors such as Xythos, Google Apps Premier Edition, ZoHo, and Salesforce.com capitalize on the trend for IT to move faster and manage less. Five years ago, SaaS was a newly minted buzzword. For several large companies, it is becoming as way of life.

One of the main benefits to SaaS is the cost structure. For example, Google Apps Premier Edition costs just $50 per user per year, and you can remove users anytime. And, it is enterprise ready: Google Apps supports IMAP migration, e-mail routing, an open API for user account synchronization, single-sign on, and third-party integration. There’s also a deployable Google Apps Standard Edition that’s free to use, yet has some of the main advantages without the integration.

"Much of the pressure to move toward SaaS workplaces is coming from end-user, mobile workers, and web consumers," says Jim Murphy, the research director at AMR Research. "One of the big trends in enterprise IT is the fact that it's so easy for any user to adopt something like Google Apps or even Facebook -- they don't have to wait for IT to deploy it."

One early adopter of SaaS for knowledge workers is Prudential Financial in Newark, NJ. The company is adding about 60 new Google Apps users per month with a goal of having 1,200 seats by mid-2008. The cost structure was attractive, according to Camden Daily, the director of technology at Prudential, but the main benefit is in flexibility of deployment.

Google Apps is the corporate equivalent of Google’s familiar tools for mail, calendar, documents, and other consumer apps. Mike West, vice president at strategy consulting firm Saugatuck Technology, says SaaS has typically been the purview of companies who want to offload "fringe" services such as customer relationship management  -- thus the success of Salesforce.com -- but agrees with Murphy that the trend is in mobile workers asking for – and getting – more online tools.

Les Sease is the IT Director for Prudential Carolina Real Estate in North Charlston, South Carolina, one of the satellite offices that has started using Google Apps. Prudential normally runs a corporate mail server for satellite offices, but Sease avoided a capital purchase and deployed Google Apps Premier Edition for mail, scheduling, documents, slideshows, and spreadsheets. For him, the timing was right: a software and hardware upgrade was required to keep Microsoft Exchange Server running.

"The big thing is being able to have it when you need it, where you need it," says Sease. "It just gives us a working environment so we don't have to be confined to one computer."

Sease says Google's Postini acquisition was a critical because it provided redundancy that was not available before. "We have had people delete important e-mails and can now recover them," he says.

Another example of anytime, anywhere software services is Midas Auto Stores in Houston, Texas, which started using Google Apps to give employees the ability to communicate more with customers.

"Managers and assistant managers at each store are using Gmail regularly to respond to customers and track appointments," says Chris Montgomery, who owns six Midas stores in the Houston area. "Customers can schedule appointments at our website. When they do so, a form email is sent to the manager and the customer (as a notification it went through). From the email, managers can choose to add the appointment to their calendar, or just keep track of it in their inbox. Because managers now respond to email, on-line appointment scheduling is more feasible."

For Montgomery, the main benefits to SaaS are ease of deployment, low cost -- he says he has been "bootstrapping" with free e-mail that none of his managers took seriously -- and a low barrier to adoption. He makes the point that enterprise-class software services – which run as reliably as a corporate server, provide redundancy and scalability, fast upgrades, and good usability for end users – are showing up" in unlikely places including the back-room of a Midas Repair Shop."

"Since software lives in the cloud, it can be improved as often as needed without tying up the IT department or inconveniencing users," says Rajen Sheth, a senior product manager for Google Enterprise. "This 'versionless' software eliminates upgrade projects and helps technology keep pace with the speed of business, giving employees access to new technology early and often rather than forcing them to wait for a final, packaged product to be shipped."

 "The whole management of software is an untidy mess," says Saugatuck's West. "You've got to go and acquire it, manage new releases, have to integrate new releases. With SaaS, you pay the subscription fee [typically around $50 per user per year, or with no cost per user] for as long as you choose to use it based upon a number of users. There is no big capital outlay."

ZoHo is another company that is ready to deliver a flexible alternative to in-house software. Already transitioning from a company that provides consumer-friendly tools for writing documents and tracking your schedule, ZoHo has set its sites on the enterprise as well, a very recent move.

"For projects involving people from three or more time zones, spread out in different countries, this is a great solution," says George Bakalov, founder and president of the Harvest Breakthrough International Network, a religious organization that uses ZoHo for business. "Sending emails back and forth has been minimized by about 70-80%. For file management, project files are all in one place with new versions available. ZoHo has much better overall project management [that the desktop]. The forums allow us to cover a subject without having to chase emails later, so it's more coherent."

Even with these success stories, SaaS still has challenges to overcome. One key hurdle is that many companies have developed scripts and macros around Microsoft's desktop offerings, creating an entanglement that will be hard to de-construct. SaaS also depends on good throughput and a reliable connection, lending itself to some industries – such as health and financial – and not as much to media creation industries such as music and movies. "There will always be a need for desktop applications that provide advanced functionality that's best delivered from a client -- such as high-powered computations in spreadsheets-- but less and less work is like that," says Google's Sheth.

"SaaS is a complementary approach rather than a holistic approach -- for any large enterprise, at least," says AMR's Murphy. "SaaS's strongest appeal tends to be in focused areas were the need is high, when internally developed and deployed systems have already failed ( CRM is huge here). A lot of the other inhibitors to SaaS adoption are security and privacy, protection of IP, need for customization in order to differentiate, and compliance -- including regulatory compliance and supporting litigation requirements. In some industries for some processes and capabilities, SaaS isn't an option. For instance, in pharmaceuticals, document management systems are validated for FDA compliance."  

Of course, even in these industries, SaaS will make in-roads – the cloud is invading IT. In CRM, for example, where off-loading the complex process of customer management is a chore for internal staff, a company like Salesforce.com has now reached a million users with about 100 million transactions per day. Both Microsoft and Google are building data centers all around the United States, and broadband access is becoming ubiquitous.

Once a fringe option, SaaS is now making progress with mission critical work among knowledge workers. Someday all software will run online, and clunky desktop apps will be a distant memory.


This article was originally published on 2008-02-15
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