Budget sufficiently for cloud, SaaS user warns

Companies rolling out their software-as-a-service projects need to allocate sufficient budget for licenses and pay attention to user acceptance and training.

SINGAPORE--When a company rolls out its SaaS (software-as-a-service) project, it must ensure it has allocated sufficient budget for user licenses, a Salesforce.com customer advised.

Andy Cocks, director, solutions development group and alliances for Datacraft Asia, said the company found, after it had rolled out its Salesforce.com CRM (customer relationship management) project, that it had under-provisioned for user licenses.

"We underestimated the number we needed, because more and more people started wanting access," he told ZDNet Asia on the sidelines of a Springboard Research conference held Wednesday. Cocks was invited by Salesforce.com to speak as a customer reference.

He explained that this blew the initial budget allocated for the project. "Salesforce.com licenses aren't necessarily cheap," Cocks noted.

But Cocks said the project was still cheaper to roll out, than if the company had invested in a large, on-premise equivalent. SaaS was chosen as a way to save upfront costs, he said.

The Singapore-based IT services provider rolled out its Salesforce.com CRM project toward the end of 2004--a process taking "only" 11 weeks, Cocks said.

He also advised companies looking to implement a SaaS project, to have a deeper ongoing involvement with the project, and to have an "owner" within the company who has a vested interest in ensuring it is carried out successfully in the long run.

He said Datacraft had outsourced the implementation of the project to a consulting firm--a decision which did not ensure the company actively kept up with new features of the platform later on. "Companies also need someone who will talk to sales people in the field to get feedback," he said.

"Management loved the system, but it took some convincing to make sales staff [embrace] the system. There was a cultural change," Cocks said.

Michael Barnes, vice president of software and Asia-Pacific research at Springboard, told ZDNet Asia, SaaS deployments mean companies don't have to worry about software upgrades because they are taken care of by the vendor on the server side.

But companies should pay extra effort to user training and acceptance, to ensure changes don't cause friction, Barnes added.

System integrators too should think about differentiating themselves with business consulting services, he said. "There is no value in systems integration... It is a commodity. Companies need their employees to understand why the [SaaS project] was chosen.

"System integrators need to embrace the idea that IT is a means to an end. Expertise is where they can create defensible intellectual property," said Barnes.

On vendor positioning in the SaaS market, he said emphasis is shifting from providing a standalone application to providing the collective value of applications as a platform. Salesforce.com has moved from just being a CRM provider to hosting its App Exchange platform, and Sun too has jumped on the platform provider bandwagon.

Hardware providers like IBM are also doing good business supplying the physical infrastructure powering the cloud behind platforms, he said.

"The only vendor potentially suffering from the market's interest in SaaS is Microsoft. Its business model is centered around linking hardware to installed software.

"It is struggling most to articulate where it fits [in the market], that's why it has its 'software plus services' positioning, to straddle both concepts," said Barnes.