SaaS Takes Flight: Web Apps to Take Over the Desktop

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 andjust about any other trendy mobile gadget. This trend of knowledge workersdemanding more flexibility is increasing, and IT must respond.

One answer is Software-as-a-Service (SaaS), which offloadsthe cumbersome chore of versioning locally-housed software to a third-party.Leading SaaS vendors such as Xythos, Google Apps Premier Edition, ZoHo, 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. Forexample, Google Apps Premier Edition costs just $50 per user per year, and youcan remove users anytime. And, it is enterprise ready: Google Apps supports IMAPmigration, e-mail routing, an openAPI foruser account synchronization, single-sign on, and third-party integration.There?s also a deployable Google Apps Standard Edition that?s free to use, yethas some of the main advantages without the integration.

"Much of the pressure to move toward SaaS workplaces iscoming from end-user, mobile workers, and web consumers," says Jim Murphy,the research director atAMR Research."One of the big trends in enterprise IT is the fact that it’s so easy forany user to adopt something like Google Apps or even Facebook — they don’thave to wait for IT to deploy it."

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

Google Apps is the corporate equivalent of Google?s familiartools for mail, calendar, documents, and other consumer apps. Mike West, vicepresident at strategy consulting firm Saugatuck Technology, says SaaS hastypically been the purview of companies who want to offload "fringe"services such as customer relationship management  — thus the success of — butagrees 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 RealEstate inNorth Charlston,SouthCarolina, one of the satellite offices that hasstarted using Google Apps. Prudential normally runs a corporate mail server forsatellite offices, but Sease avoided a capital purchase and deployed GoogleApps Premier Edition for mail, scheduling, documents, slideshows, andspreadsheets. For him, the timing was right: a software and hardware upgrade wasrequired to keep Microsoft Exchange Server running.

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

Sease says Google’s Postini acquisition was a criticalbecause it provided redundancy that was not available before. "We have hadpeople delete important e-mails and can now recover them," he says.

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

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

ForMontgomery,the main benefits to SaaS are ease of deployment, low cost — he says he hasbeen "bootstrapping" with free e-mail that none of his managers tookseriously — and a low barrier to adoption. He makes the point thatenterprise-class software services ? which run as reliably as a corporateserver, provide redundancy and scalability, fast upgrades, and good usabilityfor end users ? are showing up" in unlikely places including the back-roomof a Midas Repair Shop."

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

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

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

"For projects involving people from three or more timezones, spread out in different countries, this is a great solution," saysGeorge Bakalov, founder and president of the Harvest Breakthrough InternationalNetwork, a religious organization that uses ZoHo for business. "Sendingemails 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 muchbetter overall project management [that the desktop]. The forums allow us tocover a subject without having to chase emails later, so it’s morecoherent."

Even with these success stories, SaaS still has challengesto overcome. One key hurdle is that many companies have developed scripts andmacros around Microsoft’s desktop offerings, creating an entanglement that willbe hard to de-construct. SaaS also depends on good throughput and a reliableconnection, 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 provideadvanced functionality that’s best delivered from a client — such ashigh-powered computations in spreadsheets– but less and less work is likethat," says Google’s Sheth.

"SaaS is a complementary approach rather than aholistic approach — for any large enterprise, at least," saysAMR‘sMurphy. "SaaS’s strongest appeal tends to be in focused areas were theneed is high, when internally developed and deployed systems have alreadyfailed (CRM is huge here). A lot of theother inhibitors to SaaS adoption are security and privacy, protection of IP,need for customization in order to differentiate, and compliance — includingregulatory compliance and supporting litigation requirements. In someindustries for some processes and capabilities, SaaS isn’t an option. Forinstance, in pharmaceuticals, document management systems are validated for FDAcompliance."  

Of course, even in these industries, SaaS will make in-roads? the cloud is invading IT. InCRM, forexample, where off-loading the complex process of customer management is achore for internal staff, a company like has now reached amillion users with about 100 million transactions per day. Both Microsoft andGoogle are building data centers all around theUnitedStates, and broadband access is becomingubiquitous.

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


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