Would you make this big a bet on SaaS?

Network World last month reported on Vedior North America, a $1-billion-a-year staff placement agency that is implementing a hosted staffing and recruiting application to run its business.

Yep, you read that right, Vedior's core business activity is recruitment and staffing,Maybe adopting the SaaS model is a source of competitive advantage and it's going to run that core activity on hosted software. Thus breaking the very first of ZDNet's IT Commandments: Thou shalt not outsource mission-critical functions.

CIO Peter Ross admitted to Network World that this was a bold move: "We need a very good sales and recruiting organization. That activity is critical. We mess up the candidates, or we mess up the clients — we're dead."

So why on earth did Vedior make such a huge gamble? Mainly because the hosted application was better than anything Vedior could implement in-house, and easier to keep up-to-date because the vendor takes care of upgrades. "Too many IT staff in its different divisions were duplicating each other's development efforts. Now internal IT staff focus on revenue-generating activities and let the service provider focus on hardware, performance and network connectivity," the article says.

But much more than this, the hosted application is just better equipped to automate the routine activities that keep Vedior's staff from going out and making money. It improves Vedior's business efficiency: "The more the software can compress the time it takes for candidates to apply, clients to place job orders, and recruiters to match up candidates and clients, the better," the article explains.

I think this sounds like a smart move by Vedior. It certainly seems to be one the company has carefully thought through. I suppose some people might argue that Vedior has just thrown away its competitive advantage, but how likely is it that all its competitors will do the same thing? For the moment, maybe adopting the SaaS model for its core business automation is a source of competitive advantage because it's gone out on a limb where none of its rivals would dare follow. Now it can focus on honing the skills of its sales staff and its business development processes, and maybe those are its most distinctive attributes when it comes to winning and retaining customers rather than having its own custom in-house processes.