Organizing Conversion

By John Jainschigg  |  Posted 2008-06-26 Print this article Print

IT leaders polled about software as a service confirm that it delivers robust applications—typically at lower cost than conventional deployment and licensing models. But implementation is slow in the enterprise core, where data security, availability and ease of integration remain key concerns.


Migrating to SaaS is easiest when considering point solutions, such as Web conferencing, or applications that require only data conversion but are comprehensive or monolithic, such as human resources. Web conferencing, customer relationship management (CRM), HR/benefits and customer/employee survey applications are the top four domains in which survey respondents said they are licensing SaaS, or planning to do so within 24 months. Areas that currently license conventional software the most include e-mail, accounting/billing and business intelligence.

Prospects seem especially good for SaaS conversions when departments or business units can be brought on individually. The predicted uptake is much less when the applications are broader-based and more highly integrated with infrastructure and process, such as enterprise resource planning systems.

E-mail, which is both universal and commoditized, offers a lot of potential for SaaS conversion. Currently, the vast majority of survey respondents said they are deploying e-mail applications in the conventional mold, but they also listed e-mail as the first SaaS application most likely to completely replace conventional applications in their company.


Steggles of RIMS, Burns of the MacArthur Foundation and other CIOs interviewed mentioned e-mail as a likely near-term target for SaaS conversion. That’s partially due to the growing sense that comprehensive e-mail management—incorporating virus protection, anti-spam, and a host of archival and reporting features that enable compliance with the Sarbanes-Oxley Act and other regulations—is an essential business tool.

However, even in situations in which SaaS provides a competitive solution, funding the conversion of conventional applications to a service model can be problematic.

RIMS’ Steggles explains: “The core application for our business is the Association Management System, which is complex and generally has a long service life. We know very closely what our cost for maintaining that application is, year over year.

“It can be hard to propose a completely different model, in which—due to a simple lack of experience—one’s predictive assurance is less. Further, it’s always easier to obtain capital funding than operational funding, though you can control expenses far better with a fixed monthly cost.”

Survey respondents seemed to agree about the difficulty of morphing their accounting systems into paying for SaaS on the classic pay-per-use model used by electric companies. Half said they would prefer to pay a flat-fee for an enterprise license. Only 23 percent preferred per-user pricing, and 18 percent preferred a usage payment method.


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