The advent and adaption of SaaS platforms by corporations is fundamentally altering the way of building business applications. Adoption of SaaS applications is growing at a pace six times the rate of on -premise enterprise applications. By 2018, IDC estimates that about 28% of applications will be SaaS based as against 16.6% of applications being SaaS based in year 2013. Enterprise application market as estimated by IDC in 2013 was $ 136b.
Proliferation of usage of SaaS applications provides its own set of challenges and opportunities to the IT departments who still need to build custom on premise applications for their companies.
SaaS accelerates time to Value:
Adoption of SaaS doesn’t entail significant CAPEX expenses. All you need is a subscription to the services and an Internet connection to start using it. In the past, building applications was a long drawn, complex process. Business used to sign upfront for a significant dollar spend and hope to realize the value at some point in time in future. Value realization using a SaaS platform is immediate. One can swipe a credit card and start using Salesforce for business in no time. It is that simple.
IT departments building on-premise applications should adapt to the need for accelerated time to value in their design and development process. They should not take the route of complex, lengthy and expensive way of coding applications and multi year implementations. Companies developing on-premise applications should adopt modular architectures, resort to rapid prototyping, iterative development and use flexible reusable components. API architectures must be extensively used to enable this modularity and also opening them to access internal or external software components.
SaaS platforms enables and are built for usage:
When a user signs up to use a SaaS application, because of the modularity in the way they are built and the way they are priced, she signs up only for those features and functionalities that she would actually use. Salesforce, poster child for a successful SaaS application, provides multiple price points for varied level of usage.
Contrast that with the custom business applications that are built by a corporation in house. Typically during the requirements gathering phase, user gives all possible use cases of requirements to be built out into the application. Whereas in the reality a lot of features and functionalities remain unused and there is a significant usage gap. This also affects time to value and increases cost of development.
On-premise applications of the future should be designed to significantly reduce this usage gap. This requires very strong requirements management framework, which helps the business visualize usage of the application during the design stage and weed out the requirements that are superfluous and don’t form part of significant usage.
SaaS enables multi tenant architecture and easy customization
A SaaS platform is epitome of one -to -many architecture. At the same time enabling user to customize to enable his process and making the user feel that this is a one -to -one architecture. SaaS application therefore makes it redundant to maintain various versions of outdated code, saving time and dollars on maintenance and infrastructure. SaaS also enables that these user customizations are preserved during the upgrades with less risk and very low need for adoption.
Future on premise business applications should embrace this design principle. IT departments should move away from managing complexity to enabling simplification.
SaaS platforms are being adopted by business’ directly as against previous practice of IT departments
Because of ease of use and adoption, most of the SaaS technology is being directly sold to the end users ( SaaS CRM to sales teams, SaaS HR platforms to HR). This change in structure of spending IT dollars is also being reflected in new roles and org structures that are coming up. Chief Marketing Technology officer ( CMTO)is one such role. Currently prevalent at consumer product companies, this CMTO sits at the nexus of CMO, outside software providers, CIO and marketing. He typically makes the technology decisions and has the budget and spending powers.
IT departments developing on premise applications should embrace this change whole-heartedly. They should provide a seat at the table to the business user at all stages of development, as against current typical black box approach. IT departments should adapt to business users inputs and veto decisions to make applications and IT department more business aligned.
SaaS is driving a paradigm shift in the way IT is produced and consumed by corporations. IT departments within corporations can stay relevant and thrive by adopting best principles of SaaS to their development and sustenance processes
Guru Bhoopala is a consultant, CIO-advisor, trekking enthusiast, and currently is President and Managing partner of abhra inc ( www.abhrainc.com)