Software as Service: The Next Generation
Sometime last year, it became clear that ClearChoice had a problem. The company’s chain of dental-implant centers was at 29 and counting, testing the elasticity of its disparate IT systems. Each location had its own database fed by site-specific instances of applications—most notably Great Plains ERP software—making it difficult to get any visibility into whether the company was operating at peak efficiency.
With plans to grow to 50 locations by 2014, ClearChoice needed a platform that would work from a single database, thus improving reporting capabilities. It also needed to provide better transparency to the doctors who own each franchise, giving them quicker access to the financial data they need to manage their locations.
The company wasn’t looking specifically for a cloud-based software as a service solution, but SaaS platforms soon looked attractive because they would bring down deployment costs as new dental-implant centers opened. What’s more, these platforms would improve access to data, says Christopher Miller, program manager of strategic planning and analytics, and the company’s de facto head of IT.
ClearChoice’s ERP search led it to NetSuite’s cloud-based SaaS offering, but it still was hesitant about placing such
critical business data into the cloud. “It took a little bit of help to get people comfortable with the idea that their data isn’t in some amorphous cloud,” says Miller. “It’s in a state-of-the-art data center.”
When it comes to making the move to SaaS applications, the question for most organizations today isn’t so much “if,” as it is “when”—and “to what extent.” Concerns about data security have steadily given way, as more companies discover what ClearChoice did: SaaS applications bring immediate business value, minimal technical hurdles and compelling benefits.
Just months after its ERP migration, ClearChoice’s NetSuite environment has become so indispensable that the company is looking to migrate its CRM and purchasing systems onto the platform later this year. The company is now more quickly able to compile information about things such as how much it’s paying oral surgeons, and it has eased the crunch related to the monthly closing of its books.
“We’re doing things with the push of a button that used to take us hours,” Miller says.
The timing of ClearChoice’s move to the cloud has been critical on another front: The company is selling a stake in the business to a private equity firm—a deal Miller says wouldn’t have been possible if ClearChoice had remained on its legacy ERP system.
For Welcome Wagon, the decision to move its systems to SaaS platforms was born of financial necessity. By the late 1990s, with the growth of two-income homes resulting in fewer women being at home during the day, the once-iconic service was forced to dispense with its familiar “hostesses,” who had been greeting new homeowners for 70 years.
The revamped Welcome Wagon, which focused on delivering ad-filled coupon books to new homeowners, struggled until June 2009, when it was bought by South Florida Media Group. Faced with rising IT-personnel and server-maintenance costs, the new owners quickly realized that, rather than attempt to make sense of the complicated menagerie of technologies they’d inherited, their best option was to completely rethink Welcome Wagon’s IT, says Eric Nudelman, director of IT.
That effort started about a year ago with a move to vtiger, an open-source cloud-based CRM system that would also be used to manage advertising contracts—from order entry to fulfillment. The company then started looking for a SaaS financial app and eventually chose Intacct.
As the company moved further into deployment, it discovered that Intacct had one potentially critical failing: It couldn’t recognize revenue the way Welcome Wagon did. But because vtiger was open source, Welcome Wagon was able to customize it to handle the revenue-recognition functions, using vtiger to format data so that it could be used by Intacct.
“Vtiger can take data in any way I want it to, and the output is made usable by just about anything,” says Nudelman.
Welcome Wagon likely will run its vtiger-Intacct cloud environment parallel to its legacy systems until October, when it anticipates making the final switch to being a fully cloud-enabled company, he says.
In retrospect, Nudelman says he could have been a bit more careful about the migration to Intacct. He suggests that other companies that are considering adopting SaaS applications perform thorough due diligence.
“Make sure before you jump into SaaS that you dot your i’s and cross your t’s before you start,” he advises. “Explain exactly what you need to do, and solidify your understanding of how the app will work for you. Understand what your core requirements are and make sure they’re met.”
FEARING LOSS OF CONTROL
One of the challenges many companies considering SaaS face is a loss of control. Jeff Muscarella, executive vice president with spend-management consultancy NPI Financial, says this manifests itself initially during contract talks. The way to avoid being disappointed, he says, is to be very specific about your company’s needs.
“In a lot of these agreements, the starting point comes from the vendor,” says Muscarella. “The [agreements are] typically not as well developed as they should be if you want to be safe as the buyer.”
As in the traditional software market, smaller companies carry less weight with vendors, he says, making it even more important that they ask hard questions—both of their vendors and within their organizations—about what the service does (or should do) and what the service-level agreement covers (or should cover).
MAKING PLANS, INTERVIEWING USERS
The state of Oregon did a lot of internal soul-searching before it looked for a statewide collaboration platform. Before beginning its search, state IT executives talked to various agencies about what they’d want out of a collaboration app, and what business processes it would support. “They know the business processes best and can apply the technology best,” says Wally Rogers, Oregon’s e-government manager.
Ultimately, the state selected Jive Software’s enterprise social networking platform as the foundation for Oregon GovSpace, which enables state agencies to collaborate—not just with each other, but with citizen groups, employees, vendors, private industry, counties and advisory committees. The platform was an especially good fit for an IT organization that doesn’t have a central application-development group, yet increasingly needs powerful tools to deliver data and knowledge throughout the enterprise.
“For us, SaaS is perfect,” says CIO Dugan Petty. “The data sets with open APIs allow developers to do mashups so we can see data in different ways, and it gives users control over how they view and tabulate data.”
Launched in 2008 with 200 users, Oregon GovSpace today has more than 5,000 users from more than 40 state agencies and 190 other organizations. They use the SaaS platform for document sharing, project management, communications, crowd-sourcing and knowledge retention—all while being able to customize it much more than is typical for a state government application.
The way Petty sees it, the success of Oregon GovSpace is due—more than anything else—to something all good SaaS apps share: People like using it. And the more they like using it, the more they’ll get others to use it.
“Growth tells us it’s a great solution,” Petty says. “It gives people a work tool that doesn’t feel like a work tool.”
That’s not to say there haven’t been lessons learned. For instance, Rogers says the initial cap of 200 users the state set for the first incarnation of Oregon GovSpace was too small for an organization of 40,000 people to get true insight into collaboration capabilities. If he had it to do again, Rogers says he’d start with a sample size closer to 1,000 users.
As a result of its experience with Oregon GovSpace, the state now has SaaS strategy guidelines dictating that any agency considering a cloud-based app must take steps to ensure that the app meets its business needs, as well as determine whether the app makes sense to deploy across the statewide enterprise.
Consider the time it takes to prepare such guidelines a small ante—one that any company with SaaS in its sights should be prepared to invest.