|
Page 1 of 2
By Doug Bartholomew
If ever there was a no-brainer for midsize companies, it's software-as-a-service. Begun half a dozen or so years ago under the "applications service provider" moniker and later evolving into hosted software that customers access over the Internet, the market for SaaS is quickly maturing.
Pioneered by companies such as Salesforce.com and NetSuite, which both offer on-demand business software, SaaS today is a hot trend that only promises to get hotter. Midsize companies are attracted to this model for cost savings and ease of use, versus the more costly traditional alternative: purchasing packaged applications and servers and maintaining an IT staff to manage them.
"SaaS enables midsize businesses to take advantage of enterprise-class software at a price that is affordable and, more important, doesn't require a large IT staff," says Rob Bois, research director at AMR Research, the Boston-based IT research company. "As a very appealing model that is not tied to company size, it really solves the major problem that small and midsize companies had."
The SaaS market is expected to more than quadruple over the five-year period from 2006 to 2011, from $3.6 billion to $15 billion, according to International Data Corp., an IT research firm in Framingham, Mass. That compares to a slower growth rate for packaged software over the same period, with the market for those applications expanding by almost half, from $110 billion in 2006 to $160 billion in 2011, IDC estimates.
By 2012, 70 percent or more of all businesses with more than 100 employees will have deployed at least one SaaS application, Saugatuck Research predicts. "By 2010, SaaS will be interwoven into the enterprise architecture at many companies," says William McNee, founder and CEO at the IT research house, who spoke at the Opsource SaaS Summit earlier this year in San Francisco.
But it appears midsize companies are leading the SaaS charge.
"We see the adoption of SaaS by midsize companies more often than at the large enterprises," says Rick Nucci, CTO and co-founder of Boomi, an on-demand SaaS application integrator. "There is a general understanding today that with on demand, companies of all sizes can achieve robust enterprise capabilities without the need for an on-site implementation and rollout."
In most cases, midsize firms using SaaS have other systems, but they find this alternative especially appropriate for a particular business need. "We use Salesforce.com almost like an event-planning tool," says Drew Sellers, CIO at LifeLine Screening. The Cleveland-based health care service will conduct specialized medical tests for about 1 million people throughout the U.S. this year.
LifeLine offers its screenings at various community sites, including churches, community centers, senior centers, and recreation facilities. The company charges an average of about $125 per screening. Instead of the usual application of Salesforce.com to track sales prospects, customers, and sales, LifeLine uses the on-demand system to keep track of the hundreds of thousands of potential sites it can utilize to host screenings.
"We use it as a tickler file, and we send people who work at those churches and community centers reminders and posters to put up, and we also send them the results afterward," Sellers explains. "All that information is built into our Salesforce model."
LifeLine's users of the on-demand system are about 150 health service coordinators, employees who go out and find the sites the company uses for temporary screening centers. "They are the people who call on the senior centers and churches and try to line up people who want to host a screening event," Sellers adds.
He says SaaS was attractive to LifeLine because this workforce was dispersed, with a large proportion of people who worked from home and whose home PCs varied widely. "We needed for them to have easy access to this database of prospects," Sellers says. "And we didn't want to be in the business of distributing software to people, and having to maintain it and upgrade it. SaaS makes great sense for this distributed set of casual users where we don't control their technology."
Before adopting Salesforce.com almost two years ago, LifeLine's health service coordinators kept track of sites manually with paper files, or in some case with contact management applications such as Goldmine Software's system. "Having Salesforce for this purpose helps make these activities run smoother, because it helps these people organize tasks," Sellers says. "It's also useful when you have turnover or people take over new territories, because the new person can see all the contacts and locations."
LifeLine didn't encounter integration issues, but the company took a few weeks to configure Salesforce.com to match its particular needs. "We configured the software to fit our unique terminology, and the special fields of information we needed to capture, such as whether a site is handicapped accessible," Sellers says. "Many of the people we screen are elderly, and that's important."
Security is another concern for companies considering SaaS. As Nucci puts it, "Some companies are still concerned with putting customer data outside their own data center."
For Sellers, security was also a chief concern. "As a CIO, you also look at the whole operational and security aspect, because with a hosted SaaS solution, you're now relying on somebody else to do it. I had to get comfortable with that. With Salesforce being one of the leaders in this area, we were pretty comfortable."
|
