SaaS: The New Distress Call
For business information-technology needs, software as a service (SaaS) applications are the wave of the future. Pro or con?
Pro: Flexible and Efficient
Imagine you just bought a new shirt. It fit great when you tried it on, but shortly afterward you realize it’s scratchy.
Now imagine you take it back. The clerk says, "Sorry, no returns. But we’ll make alterations for a fee." Alterations won’t help—the entire shirt feels scratchy. But you can’t afford to buy another. So you get used to the scratchy shirt. You never like it, and you complain about it.
Not fun.
That’s essentially what happens to many companies that buy software to handle crucial processes encompassing accounting, human resources, or customer service. The software initially may be customized at great expense. Neither the business nor the vendor, however, can tell how it will "fit" in the months to come.
Sure, the vendor can tweak the software—for a fee, every time. Eventually the vendor’s attentiveness and responsiveness will wane. So the company struggles with software that can’t adapt to evolving demands.
Reality check: Business is a moving target. Needs change. Good tools are solutions, never obstacles. That’s why software as a service (SaaS) makes sense.
Enterprise software used to run only on dedicated computers. Those behemoth programs didn’t talk to each other, and they weren’t designed for change. Such constraints are, in part, why old-school enterprise software vendors developed such an aversion to changes in their products.
Meanwhile, on the Internet, technology is more creative, collaborative, and versatile than was ever possible within a closed corporate IT silo. Today’s programs not only exchange information easily but also depend on sharing and collaboration. These programs are constantly evolving and improving, offering greater flexibility for specific customization.
Even better, their shared nature offers greater economies of scale, bringing down the price. Security has vastly improved. And since it all runs over the Internet, individual end users have considerable freedom to use SaaS programs where and when they want, on devices they prefer. They can even customize interfaces and reporting.
Best of all: Companies can "try out" SaaS offerings thoroughly, at limited cost. You can be certain that the software you’ll use will fit and keep pace with changing needs.
SaaS vendors will never say "no exchanges, no returns." Their business depends not just on getting you to buy but also on keeping you satisfied.
Con: Better Options Abound
Over the past 15 years, the concept of software as a service has enabled many large organizations to simplify their operations.
Nonetheless, it is not the only, or best, way to deploy software. The computer is, after all, a universal machine that can adapt to a multitude of tasks for a wide variety of organizations. To claim that SaaS is the best way to provide instructions to a computer is to take that universal machine and restrict it to a tight, narrow role.
In managing information technology, whether that technology includes one computer or a giant network of machines, we generally attempt to minimize the cost of the technology, the amount of time required to keep our systems in working order, and the risk of disrupting our activities. All three of these factors can fall prey to the standardizing forces of SaaS.
Be they large or small, computers work on a local scale. They must meet a specific need and hence have been programmed and configured to meet that need. They can contain a special set of hardware, a unique database, and a set of programs they have to keep in balance. In spite of all the discussion about "local configuration" and "individual services," we can regularly find circumstances best served by a machine running its own set of software.
Even in its simplest forms, SaaS can disrupt local operations by forcing machines to use a standard interface when a different one would work much more effectively. SaaS could use up time for support services that would be better devoted to local needs. It can also introduce software, good or bad, that disrupts operations. I can already point to offices that have stopped using SaaS because the programs they get from their central provider either take too much time during the wrong part of the day or interact badly with special software they need for their business.
In many circumstances, organizations can benefit by conceiving of software as a centrally provided service such as that delivered by SaaS, but they should remember that the computer is a universal machine, and they should be unafraid to use such machines in unusual ways, especially in settings where locally provided software— individual programs running on specific work stations—reduces costs, shortens delays, and lowers risk.
Opinions and conclusions expressed in the BusinessWeek Debate Room do not necessarily reflect the views of BusinessWeek, BusinessWeek.com, or The McGraw-Hill Companies.