The Success Factors of renting apps are too many to ignore

On the flight home from Gartner's Symposium/ITxpo (and JavaOne, which I originally didn't go to cover), I sat next to (and met for the first time) SuccessFactors client executive Martin Pitkow. Prior to meeting Mr.
Written by David Berlind, Inactive

On the flight home from Gartner's Symposium/ITxpo (and JavaOne, which I originally didn't go to cover), I sat next to (and met for the first time) SuccessFactors client executive Martin Pitkow. Prior to meeting Mr. Pitkow, I'd never even heard of SuccessFactors.  While CRM specialists Salesforce.com, RightNow Technologies, and NetSuite are the application service provider poster children that are normally invoked when the virtues of service-based delivery of software are being discussed, the truth is that there are a great many other Software-as-a-Service (SaaS) providers (like SuccessFactors) in important non-CRM categories (like the one Success Factors addresses: Performance and Talent Management).  On the heels of my trip to San Francisco where Gartner analyst Darryl Plummer (and Gartner) 'salesforce is making it easy for the rest of us [SaaSers].' turned a major corner when he issued the recommendations "don’t own, rent" and "don’t buy applications, buy solutions based on service," randomly ending up in the seat next to Pitkow was rather fortuitous because it forced me to rethink the reasons that the benefits of renting greatly outweigh those of owning.

I don't know why the metaphor came to mind, but when I think about the way that SaaSers can very cost effectively deliver the power of enterprise-class applications to small and medium businesses that at one time could never dream of affording such traditionally in-sourced solution, the product Tang came to mind.  As it turns out, its a bit of an urban myth that Tang was developed for the space program.  It was apparently in the market for a while when NASA discovered that its properties were well suited to the needs of humans in space. But even if Tang wasn't a NASA-inspired invention that trickled down to the masses, plenty of other inventions like freeze-dried ice cream were. 

The point is that if it weren't for the needs of a very small yet lucrative subset of the market (in the case of software, very large corporations), enterprise-class software would never have been developed.  And, had it not been for a scalable delivery system (the Internet) that allows providers of enterprise class software to pipe their solutions in the browsers of decidedly non-enterprise users, we wouldn't be seeing the so-called Tang effects of SaaS.  But we are and I'm speaking from recent experience.

In the course of running Mashup Camp, there came a point where camp co-organizer Doug Gold and I were faced with the challenging task of maintaining contact with more than a thousand people, making sure none of them or their requests slipped through the cracks.  Just staying on top of that many constituents is a challenge.  Doing it from our homes with separate email systems and databases (multiple unshared spreadsheets, if you must know) was a complete barrier to collaborating and efficiently dividing the duties between the two of us. 

Consolidating all of that data and pouring it into an enterprise-class solution like Salesforce.com that Doug and I could share across the Internet has been a near-biblical experience for us.  Within one day of being operational (which only took a few days because of the data cleansing and imports I had to do), we were able to ping the registrants for the Mashup Camp 2 to confirm their registration.  Granted, we're not using salesforce.com to sell to registrants.  Mashup Camp is free to attend.  But, for both Doug and I to be able to add registrants to the same system (over the Internet) and then to send an email to only those registrants that were [1] signed up for Camp 2 (as opposed to Camp 1) and [2] not already confirmed (so as to avoid duplication) would have been an impossibly laborious task given the distributed and disorganized condition of our data prior to pouring it into salesforce. 

OK. So, driving an e-mail blast with a SQL-query of a shared-database may not be that enterprisey.  But, in exploring the many nooks and crannies of salesforce.com, there are a bunch of other enterprise features that we are using or plan to use.  Everything from its integration with Outlook (needs improvement) to its Web form generation (where the data flows directly from a Web form into our shared database) to usage of salesforce.com's AppExchange to flow form-captured data back onto the Web site.  Could competing SaaS-based CRM fill the same needs?  Probably.  Can I unequivocally say salesforce.com is better than others based on my tests? No.  I haven't tested the others.

But like I said, compared to the locally hosted software (whether desktop or server-based) that I'm used to using, the experience of moving to salesforce was a near biblical one from the collaborative and productivity points of view.  Speaking of locally hosted, or "in-sourced" solutions, there are alternatives.  One of them is SugarCRM (which several people recommend we try).  Even though I'm a big fan of outsourcing to SaaSers, the truth is that we're already insourcing.  While the Linux server we use for Mashup Camp is a hosted-solution, the applications running on it --  Apache, Wordpress ( for the Mashup Camp blog), MediaWiki, and vBulletin (for threaded discussions) -- are insourced and if it weren't for the charitable contributions of time from some knowledgeable Linux sysadmins, we'd be up the fecal matter creek without a paddle when it comes to the IT in use for mashup camp.

So, to be honest, I really needed another server (SugarCRM) to insource like I needed a hole in my head.  Think about it.  How many businesses need the headaches of:

  • downloading, installing, configuring and making operational a mission critical application
  • updating that application every time some important patch or update becomes available
  • figuring out how to Webify that application so that it can be used from just about anywhere
  • backing up the data on a regular basis
  • worrying about availability, redundancy, and other issues related to fault-tolerance
  • providing end-user support
More IT people.  More hardware (or hosting).  More costs.  More headaches.  And these are benefits that can accrue to businesses of any size.  Not just SMBs that get the additional benefit of enterprise-class functionality at SMB prices or lower (for 5 users, the Team Edition of salesforce is $995 per year). 

If the way salesforce.com can, in Tang-like fashion, cost effectively trickle enterprise-class functionality to businesses that might not normally be able to afford it is any evidence of what other SaaSers can do, then it's not hard to understand why, during the flight, Pitkow said "salesforce is making it easy for the rest of us [SaaSers]." 

As far as SuccessFactors is concerned, well, Doug and I really don't have a need for Performance and Talent Management. But, for you, it may have.  And before you decide an "owned" or an insourced solution for your HRMS-related needs or any other application, perhaps now is the time to take a closer look at multi-tenant rented solutions like SuccessFactors, Authoria.com (also in the HRMS category), or one of the very many other services-oriented solutions that could ultimately lead you to heeding Darryl Plummer's advice.

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