Making Enterprise Application SaaSy!
August 17, 2007 by Raj Sheelvant
After 15 years being IT Organizations’ central focus, Enterprise applications are getting old and decrepit and desperately needs a facelift. Like it or not these applications can now be classified as Legacy system (Read Koch’s IT Strategy Blog Riding the ERP Bus Forever for more on ‘Legacy’ Enterprise systems). Implementation and Integration of Enterprise application has become more and more complex (instead of getting simpler) after several versions of upgrade. From a customer’s perspective Enterprise application calls for a large IT department to implement and sustain this behemoth (which adds to thier cost). Hence, companies are now looking for other ways to handle Enterprise applications.
It appears that On-Demand delivery model or SaaS (Software as a Service) model has emerged as a preferred choice that makes lot of economic sense to the companies. It’s being adopted at a rapid rate. This is a model where vendors own the enterprise system. The organization /customers pay for using the system but not for owning the system. This disruptive delivery model is bound to shake up the current leaders in ‘legacy’ enterprise applications. This unique delivery model will make Enterprise applications more agile and relevant to the company’s strategy.
Some of the advantages of SaaS
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Smaller IT resources.
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Quicker implementation and faster training for the employees and thus reducing TCO (total cost of ownership).
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Faster ROI due to lower up-front cost.
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Lower hardware/software cost due to reduced investment in installing, upgrading and sustaining of enterprise system.
SaaS has some challenges that vendors have been successfully trying to address –
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Loss of control: Because of Reliability/Uptime
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Data security: This is a tough pill to swallow for the corporate executives. Can they trust third party vendors with the data?
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Privacy of data: Who owns the data now?
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Different integration need: How will the SaaS application integrate with the existing systems?
In my view, advantages of SaaS delivery model far outweigh the shortcomings and it’s only matter of time SaaS will be the “preferred” delivery choice for Enterprise applications. Small and Medium Enterprises have already embraced the SaaS delivery model. Larger organizations are slowly opening up to this disruptive delivery model. When I was in Melbourne Australia last month I read an interesting article about SaaS in Australian Post related to explosive growth and adoption by large organizations of SaaS
There are some political implications for the CIO’s of large organizations to fully accept SaaS model, which I will address in my next blog.
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Web 2.0 approach to enterprise application development is the first factor that makes our applications bring about a SEA-change.