Firms don't want SaaS as core platform

BERLIN--Despite the cost savings that software-as-the-service (SaaS) promises to provide, some businesses believe the on-demand delivery model is not suitable as a platform for core enterprise-class applications.

Kraft Foods, for example, is unlikely to operate its software infrastructure on an on-demand model. The food and beverage company is an SAP customer, and is currently in the midst of moving all its global offices to the SAP ECC6 platform.

Jan Ziskasen, Kraft Foods' senior director of SAP competency centers, operations and business services, told ZDNet Asia the company would only consider using SaaS on single applications such as CRM (customer relationship management), particularly in smaller markets where Kraft Foods might not want to invest as much on an a software package. The company has over 90,000 employees, and 159 manufacturing and processing facilities worldwide.

Kraft Foods is looking to build and manage an integrated software architecture, and SaaS does not necessarily support that, Ziskasen said in an interview, on the sidelines of the SAP Sapphire conference in Berlin, Germany.

"We really want to integrate our business than have our applications scattered [across the host service provider's network]. If you go with a hosted model, there would be no integration of your CRM application, with the ERP (enterprise resource planning) and SCM (supply chain management)," he explained. "You can build it, but it's not going to be easy."

For another SAP customer, Telkom Indonesia, it is about keeping the company's core business applications on-site. The telco group has some 32,000 employees and is the largest ICT company in Indonesia.

Indra Utoyo, Telkom Indonesia IT director and CIO, said the telecommunications service provider is unwilling to support critical applications on an SaaS infrastructure.

"For applications like CRM and ERP, we are not going to use SaaS because we consider these as a core platform and it's better to have them on-site," Utoyo said in an interview. The delegate was a speaker at the SAP conference.

"But for other applications such as push-mail, personal Web application, we can consider running these tools on SaaS," he said. In fact, he added, Telkom Indonesia provides these tools to its own customers as hosted services.

He noted, however, that there needs to be a wider market acceptance of the on-demand delivery model before the Indonesian telecom player will consider deploying it.

Claus E. Heinrich, a member of SAP's executive board, said: "We see in the future, a hybrid deployment where customers have installations on-site and some SaaS."

Eileen Yu of ZDNet Asia reported from SAP Sapphire 2008 in Berlin, Germany.