As SaaS adoption becomes more widely acceptable, companies are looking to push the software delivery paradigm to the next level, adding social and mobile components and syncing up multiple SaaS offerings with their legacy enterprise systems.
SaaS first gained traction as a popular deployment option for customer relationship management (CRM) software on the heels of the success of offerings like Salesforce.com. As acceptance of SaaS-based CRM grew, other horizontal enterprise applications like ERP, SCM and even collaboration and project management began to follow suit with upstart companies and mainstream enterprise application providers bringing out SaaS versions of their software to meet the escalating user demand.
Now that adopters of those platforms fully buy into the SaaS value proposition, the paradigm is beginning to take root for more vertical application areas, and experts say it's a trend that's likely to continue. Industry-specific applications in areas like finance, retail, warehouse management and tax lookup, for example, will be among the next big wave of SaaS adoption, notes Robert Mahowald, vice president of SaaS and cloud services for International Data Corp. "We're going to see a fair amount of buying of industry-specific SaaS apps, especially for those activities that are device or sensor-based," he explains. "It becomes far easier to have a cloud-based service that's very vertical and specialized when things aren't contained within the four walls of IT."
Beyond verticalization, other mainstream computing trends are likely to have an impact on SaaS adoption moving forward. Consider the consumer and business worlds' current obsession with mobile and social media technology. As users become accustomed to relying on mobile devices like smart phones and tablets to get their work done, they will come to expect their critical work applications—be they SaaS offerings or traditional on-premise programs—to be served up and easily accessible on their devices when on the road or outside of the office. That means those in IT or other departments deploying a SaaS solution need to consider the vendor's mobile strategy as part of their initial evaluation.
"You need to look at your SaaS vendor and make sure they have a mobility strategy," says Liz Herbert, a principal analyst with Forrester Research Inc. "If they don't, you have to consider how you will accomplish mobility." Specifically, Herbert says companies need to ensure they invest in iOS or Android developer talent if the onus will be on internal IT to ensure a SaaS application is accessible on popular mobile platforms.
Social media will also be a more important aspect of SaaS offerings. That's not to say SaaS applications should have a social media component—although they might. Rather, what experts anticipate is that social analytics will play a critical role as SaaS providers mine social data and activity logs to uncover usage patterns and buying trends, allowing them to deliver valuable data and insights to customers. "This creates a new form of user communication that goes well beyond the user groups of the past," says Jeffrey Kaplan, managing director at THINKstrategies, a consulting company.
Integration remains critical challenge
With more companies opting to go the SaaS route for a broader variety of applications, integration will become a more pressing challenge. As increasing amounts of business data makes its home in SaaS, IT will increasingly need to integrate it with data stored in mission-critical legacy enterprise systems in order to give the organization a complete picture. Some SaaS vendors are addressing the integration challenge with their own integration tools or opening up and exposing their APIs and positioning themselves as a Platform as a Service (PaaS). "SaaS is a fragmented landscape unlike the suites market of the on-premise world," says Forrester's Herbert. "With so many systems doing such a small part of the portfolio, it creates an integration challenge, which some are solving with tools and data marts, but it's not easy."
What also won't be easy looking out on the SaaS horizon is managing these systems as they become more entrenched. While some SaaS deployments are orchestrated by IT, an even greater number are spearhead by business groups, which see the SaaS model as a fast and easy way to spin up a system without the bottlenecks that often hamper IT-led deployments.
"With such heavy business user involvement and with it being so easy for the business to take ownership, it's difficult for IT to rein that in," Herbert says. "It becomes much more of a challenge in terms of how you handle governance. It's a huge change management/business process consulting issue and it's becoming a huge focus area for companies."
This was first published in June 2012