Uncovering the True Impact of SaaS

Companies looking for ways to save on long-term costs often consider cloud services, specifically software as a service. SaaS offers creative ways to address how companies use technology, which lets them focus on what matters most:their core business objectives. For IT organizations that deal with complex, expensive maintenance chores, the SaaS model promises to ease the burden and reduce costs and complexity.

Although SaaS sounds like an ideal technology solution, it is not a cure-all for everything that ails IT, and it doesn?t always make a significant impact on long-term costs and resource use.

That?s why it?s important for companies to consider a wide range of variables when determining what the cost savings from using SaaS might be, including hardware, storage and management. At Avanade, we?ve developed a cost-modeling tool that uses more than 120 real-world variables to measure the true impact of one enterprise SaaS offering?Microsoft?s Business Productivity Online Suite (BPOS)?on capital expenses, operating costs, energy use and carbon footprint.

Is SaaS the Right Choice?

The first step is for enterprises to determine whether SaaS or other cloud-based solutions will serve their needs. To do that, they should start by evaluating the potential business value this approach can provide.

For example, take a look at the costs associated withe-mail. This can include archiving, security, continuity, backup, policy management, maintenance, power and cooling, hardware costs and regular upgrade costs. According to Forrester research, the cost of e-mail for a 15,000-person organization can be as high as $40 per user per month.

By using SaaS-based services, the burden of creating, developing and sustaining the infrastructure is lifted from the company. This frees up resources to focus on core business objectives, and it reduces capital and operational expenses for noncore tasks.

However, in addition to evaluating the potential benefits of SaaS, companies should take the following steps before deciding to integrate a cloud-based service into their organization:

1. Investigate costs. Evaluate the costs associated with internal IT versus the cost of cloud services. That analysis will help determine what should be owned and managed internally, and what could be cloud-ready.

2. Pursue a pilot. Start with a custom application that leverages the instant scale, high-compute or bandwidth-intensive capabilities of cloud computing.

3. Communicate to your users. Make sure users are trained on the new system and know whom to contact if there are any issues. Communicating with employees is the biggest item that companies underestimate. It?s important to be as transparent and open as possible about the new system and how to use it.

4. Consider a phased rollout. The more a business knows about what it wants to do, the more likely it is that the enterprise will be able to make the changes necessary to accomplish its goals. By using a phased rollout, a company can evaluate and make changes to the solution as it is being deployed. This approach also allows the organization to achieve a few quick wins early in the process, which helps build support for the system internally.

5. Don?t forget about the IT staff. Although moving to a cloud-based solution removes a lot of the maintenance and day-to-day technical aspects from the IT staff?s responsibilities, companies still need to invest time in training IT personnel on the new technology and new skills relating to user management.

There are clear business benefits that can be derived from SaaS and other cloud-based models. But there are no guarantees, so it?s essential that companies start with a clear plan, sound analyses, and proven methodologies and practices.

Yoon-Sung Lee is senior vice president and Americas CTO at Avanade, where he is responsible for the strategic direction and adoption of the Solutions Portfolio in Avanade North America. Bob Fahey is senior director of Americas BPOS solutions, supporting Microsoft Business Productivity Online Suite solutions in the United States and Canada. Navin Mukraj is group manager, Americas, where he advises customers on how to migrate to BPOS.