Executive Briefings

SaaS & On-Demand Systems: Is the Cloud Within Your Reach?

Analyst Insight: Many businesses have been paying more attention to the concept of software as a service (SaaS) and how it can be incorporated into their IT portfolios. The most commonly stated benefits -rapid deployment, lower cost, and scalability - must be balanced by other key decision criterion, such as fit, ROI, and risk.

A recent surge of press releases regarding SaaS has highlighted low start-up cost, speed of implementations, reduced operating costs, and scalability as the greatest potential benefits of deploying the SaaS model, which allows "enterprise-class" functionality to small- and medium-sized businesses. SaaS offerings can be most advantageous to businesses that have strict rules-based processes, in which any limitations of the applications' configuration can still accommodate supply chain best practices.

The benefits should be tempered with some cautions, such as limited availability, less than adequate functional fit, and some lingering risk and security concerns. SaaS solutions may not be the best fit when the applications need to support - and are critical to enable - core business processes that create competitive advantages for the business; supply chain execution capabilities often fall within this realm.

Caution is advised when using SaaS for mission-critical supply chain processes even if the window of downtime or loss of availability is small: they could lead to a major business disruption (as would be the case for a pharmaceutical company executing a new product launch). However, global trade management, visibility, and collaboration applications may be ripe for SaaS across the board.

A detailed supply chain IT impact assessment, using a holistic approach to the classic fit-gap analysis, must be performed to determine if the SaaS model is right for the operation. That approach should would consider long-term return on investment and short-term total cost of ownership. A hybrid deployment model might be an alternative.

The Outlook

Despite the complexity of most organizations' supply chain operations and the broad range of unique business requirements across them, there will still be an increasingly attractive business case for the use of SaaS under the right conditions in 2010. At the same time, the adoption of SaaS for most business critical processes - including supply chain execution - will be slow for all, except for the most low-risk and rigid supply chain operations.

A recent surge of press releases regarding SaaS has highlighted low start-up cost, speed of implementations, reduced operating costs, and scalability as the greatest potential benefits of deploying the SaaS model, which allows "enterprise-class" functionality to small- and medium-sized businesses. SaaS offerings can be most advantageous to businesses that have strict rules-based processes, in which any limitations of the applications' configuration can still accommodate supply chain best practices.

The benefits should be tempered with some cautions, such as limited availability, less than adequate functional fit, and some lingering risk and security concerns. SaaS solutions may not be the best fit when the applications need to support - and are critical to enable - core business processes that create competitive advantages for the business; supply chain execution capabilities often fall within this realm.

Caution is advised when using SaaS for mission-critical supply chain processes even if the window of downtime or loss of availability is small: they could lead to a major business disruption (as would be the case for a pharmaceutical company executing a new product launch). However, global trade management, visibility, and collaboration applications may be ripe for SaaS across the board.

A detailed supply chain IT impact assessment, using a holistic approach to the classic fit-gap analysis, must be performed to determine if the SaaS model is right for the operation. That approach should would consider long-term return on investment and short-term total cost of ownership. A hybrid deployment model might be an alternative.

The Outlook

Despite the complexity of most organizations' supply chain operations and the broad range of unique business requirements across them, there will still be an increasingly attractive business case for the use of SaaS under the right conditions in 2010. At the same time, the adoption of SaaS for most business critical processes - including supply chain execution - will be slow for all, except for the most low-risk and rigid supply chain operations.