It's time for businesses to get SaaSy with the cloud

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Written by Kamal Ramsingh and Dr Mariana Carroll, of Deloitte SA

Millions of people use cloud computing every day to send and receive personal emails, shop online, read the news and more. But that’s just the leading edge of a growing storm.

Cloud services are also penetrating the walls of the enterprise, upending IT organisations and operating models alike. Business leaders in every function need to understand cloud basics—both the opportunities and the risks — and that means going geek.

Here are five things that you need to know about cloud computing and SaaS.

1 Cloud computing has technical advantages that translate directly into business value

Looking beyond the hype around cloud, there is one unifying theme to remember: cloud capabilities — software, infrastructure and platform — are delivered “as a service.”

Web-based email, for example, is a ubiquitous example of software as a service (SaaS). Instead of having software loaded onto your laptop or tablet, it is hosted on the Internet, largely insulating the user from the underlying technology.

 Infrastructure and platform services deal with the nuts and bolts of cloud computing — aspects that are primarily of interest to IT. Yet there are a number of technical and business advantages over traditional forms of computing that can have a direct impact on how businesses operate such as: resource pooling, rapid elasticity, on-demand, self-service, cost predictability, rapid implementation, agility and a balanced ROI.

2 The Disruption is Real

Businesses of every shape and size are using cloud computing and in particular SaaS to gain instant access to world-class IT capabilities without having to spend time and money acquiring, developing and maintaining their own IT systems and applications.

This new model enables large companies to respond more quickly to market shifts and emerging business opportunities, improving their agility and flexibility. At the same time, it enables smaller companies to grow at unprecedented speed and in some instances to compete on equal footing with businesses that are much larger.

3 SaaS is now firmly established in the enterprise space – and probably even your own company

Large enterprises are using SaaS to become more flexible and nimble. They are also using SaaS to make key business processes more effective and efficient, and are harnessing the power of the cloud to stay in tune with customers and to improve collaboration and teamwork across organizational boundaries.

At the moment, SaaS is having the biggest impact in four key business areas:

·         Customer relationship management (CRM):This was one of the first areas where SaaS provided a legitimate—and often superior—alternative to traditional IT systems.

·         Enterprise content management (ECM):With the volume of information growing exponentially, companies are using SaaS to stay on top of all the content they generate—including everything from product manuals and sales contracts to emails, word documents and social media.

·         Productivity and collaboration:Many companies are supplementing traditional PC-based office software suites with SaaS versions that are easier to support and maintain, taking advantage of cloud computing to improve collaboration. Through cloud enabled capabilities documents can be shared in real time and are no longer locked up within a single team or departmental silo. Other advantages include ubiquitous search and access to documents, and fewer problems with version control.

·         Human capital management (HCM):SaaS adoption in human resources has increased rapidly over the past few years. As companies become more global, there is greater need to coordinate HCM activities such as recruiting, training and succession planning across geographies. In the past, smaller market operations often had to wait years for their company’s top-down ERP and HCM rollouts to trickle down. SaaS turns the tables by making it economically feasible for a small market to adopt HCM first, and then roll up the solutions and lessons learned to help jump-start adoption at the enterprise level.

4 SaaS expands its reach

SaaS is now widely recognized as a core component of the future IT landscape. SaaS market share in enterprise applications is growing rapidly, and major vendors such as SAP and Oracle are working hard to develop cloud-based versions of their market-leading enterprise applications.

They are also aggressively pursuing strategic acquisitions to improve their competitiveness in this fast-paced and critical segment. SAP recently acquired SuccessFactors (HCM and talent), while continuing to develop its own cloud offering, ByDesign. Likewise, Oracle recently acquired RightNow (CRM and customer service) and Taleo (talent), while continuing to invest in its own cloud-based enterprise platform, Fusion.

5 Cloud computing are better, faster and sometimes cheaper

According to a recent Forrester survey of more than 1,000 firms across North America and Europe, cloud buyers anticipate the following benefits:

•                     Lower cost both upfront and long-term (48 percent of respondents anticipated long-term cost savings from moving to SaaS).

•                     Faster delivery of application features as well as greater business agility.

•                     Better support and satisfaction.

These findings suggest that cloud solutions are cheaper than on-premise solutions, but that’s not always true. In fact, companies such as Salesforce.com and Workday are leaders in their market segments and are priced accordingly.

Although the upfront costs of SaaS are generally lower, a recent Gartner study found that over the long run, defined as five years or more, infrastructure and license costs of on-premise solutions are often less expensive than SaaS.

This is particularly true for businesses with highly efficient IT operations. Although cost remains an important decision factor when considering SaaS, it should not be viewed as the entire business case.

Preparing for SaaS

Although SaaS is more flexible and can be implemented much more quickly than traditional enterprise technologies, it also presents new challenges. Because SaaS has the potential to fundamentally change how a business operates, there are several important steps a company should take to prepare for the move:

•                     Create a cloud ready organisation

•                     Redefine the roles of IT and the business

•                     Strengthen IT Governance

•                     Design a cloud-ready IT architecture

•                     Define criteria for deciding which activities to migrate

•                     Develop a cloud strategy and roadmap

•                     Establish an integration plan