Enterprise to SaaS Adoption ~ Getting Stronger Every Day

02Jan09

Saas (Software as a Service) model is still not adopted by traditional CIOs of fortune 500 companies. These CIOs are still putting a lot of faith in the enterprise software and are still evaluating initial SaaS companies. CIOs have following concerns about SaaS adoption:

• Data privacy – Where does data reside and who has control?
• Reliability Issue – Is SaaS reliable and robust?
• Competitive Advantage – If everyone has same SaaS then what is my competitive advantage?

Data privacy issues are still relevant and SaaS companies have to be pro-active in showing to customers that they are serious about the data security. But, is it really a big issue? I see senior executives of company walking with their laptops on the airport. Is data much safer in these laptops? I think that data centers of major SaaS companies are  much more protected than these laptops. Companies such as  Amazon, Google, Force.com etc., have invested Billions of dollar to provide centralized data centers. Most of the SaaS companies will use Google or Amazon cloud computing services to run their applications so security concerns will wane away. These data centers are far more secure than the data centers of most of the big companies.

Reliability has been a big issue. Amazon Webservices went down couple of times last year. This has impacted business and raised questions about reliability of SaaS. Google services were also disrupted in November. But, as Amazon and Google are putting billions of dollar in indrastructure business. So, they will take care of the possible relaibility issues.

For years, enterprise software companies have been selling software to Fortune 500 companies by showing them that software will increase their competitive advantage. SaaS have seen such disruptive growth on the premise that it will reduce the cost. So, SaaS started with the SMB market. But, as SaaS matured and showed that it can deliver value. SaaS is seeing rapid adoption in medium sized companies. Companies do not need to maintain their own servers, they do not need to buy maintenance services and still can use IT applications. This is a big saving for companies. But, if every  one is running the same applications then what is the competitive advantage that comes to company A over company B.  I would like to answer this question in two parts:

1. SaaS brings fast adoption and you donot need to wait for 18 months to implement and train your employees. By the time, you trained your employees and adopted enterprise software, enterprise software came out with a new version and you are again evaluating new software. So, SaaS in its’ present form offers a big competitive advantage.

2. All the money saved by adopting SaaS can be utililzed in core operations and can be utilized in creating competitive advantage.

I am not arguing that SaaS can not be customized according to your needs. SaaS can also be customized according to your needs and companies such as Salesforce.com are offering million choices of customization.

I think that SaaS is here to stay. SaaS is getting stronger day by day and this trend is also visible by search trend of SaaS on Google.

Google Trend Chart for SaaS Search in last 4 years

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Tags: adoption, Amazon, enterprise, google, SaaS, salesforce, technology