Executive Briefings

SaaS & On-Demand Systems: Software Evaluation for Software as a Service or Cloud Computing

Analyst Insight: SaaS and new enterprise software offerings have created a new dynamic for enterprise software selection as opposed to traditional software selection. The cloud evaluation process for software and services must consist of different and a more focused approach, including such factors as importance of methodology, model differentiation, industry-specific expertise and total cost of ownership.

A key technique to reduce risk, achieve ROI, minimize the chance of implementation failure and align business needs with organizational requirements is to have a software selection methodology in place.  All of these benefits can be realized by how effective your evaluation was; not being executed properly could spell disaster.  A method that provides consistent results enables you to assess differentiation between vendors early in the evaluation process.

SaaS has spawned several new models of software billing.  It is imperative that organizations know the different types of models they are evaluating and the nuances they contain. Organizations must realize the difference between SaaS, hybrid, hosted and in-house - and any combinations thereof.  The main differentiators are data, who owns it, how it is administered and stored, security of private, public, and semi-private clouds, and understanding the implementation implications that each factor will cause.

Now more than ever, cloud evaluation has become important to organizations.  Strategic size, fit, vertical industry expertise and similarities to existing clients should become areas of focus within the selection.  Vendor-specific infrastructure, architecture and support will help predict reliability of a good cloud product.  Look for software that can adapt to changing business models rapidly and the vendor's past history in delivery of the solution.

To compare an in-house application to a SaaS model requires measurable metrics that can be ascertained from the system.  Issues such as variables of time for the solution, current licenses, future licensing costs, data administration, storage costs, network management, integration costs to existing systems, support costs per year and consequent years and sometimes buyback should be heavily scrutinized.

The Outlook

These areas described above have changed the way software is purchased and sold.  Once, too costly applications were a barrier to entry for smaller companies to compete. Now SaaS can assist in profitability and enable rapid growth.  The differences between in-house and SaaS evaluations are subtle, but they are enough to disrupt your business if the incorrect selection is made.

A key technique to reduce risk, achieve ROI, minimize the chance of implementation failure and align business needs with organizational requirements is to have a software selection methodology in place.  All of these benefits can be realized by how effective your evaluation was; not being executed properly could spell disaster.  A method that provides consistent results enables you to assess differentiation between vendors early in the evaluation process.

SaaS has spawned several new models of software billing.  It is imperative that organizations know the different types of models they are evaluating and the nuances they contain. Organizations must realize the difference between SaaS, hybrid, hosted and in-house - and any combinations thereof.  The main differentiators are data, who owns it, how it is administered and stored, security of private, public, and semi-private clouds, and understanding the implementation implications that each factor will cause.

Now more than ever, cloud evaluation has become important to organizations.  Strategic size, fit, vertical industry expertise and similarities to existing clients should become areas of focus within the selection.  Vendor-specific infrastructure, architecture and support will help predict reliability of a good cloud product.  Look for software that can adapt to changing business models rapidly and the vendor's past history in delivery of the solution.

To compare an in-house application to a SaaS model requires measurable metrics that can be ascertained from the system.  Issues such as variables of time for the solution, current licenses, future licensing costs, data administration, storage costs, network management, integration costs to existing systems, support costs per year and consequent years and sometimes buyback should be heavily scrutinized.

The Outlook

These areas described above have changed the way software is purchased and sold.  Once, too costly applications were a barrier to entry for smaller companies to compete. Now SaaS can assist in profitability and enable rapid growth.  The differences between in-house and SaaS evaluations are subtle, but they are enough to disrupt your business if the incorrect selection is made.