In case you haven't heard, Software as a Service (a.k.a. SaaS, rhymes with Jazz) is the hot new thing in Silicon Valley. Simply put, this is where a vendor provides access to an application via a secure Internet link and charges on a monthly or quarterly basis (usually by user). There are lots of technology improvements that differentiated this from the old Application Service Provider (or ASP) model, but the ideas are similar.
For the client this means quicker implementations with less up front investment and lower costs to maintain the application. It also means quicker results. With the success of companies like salesforce.com and Netsuite most of the old IT concerns about application and data security are melting away.
We have used salesforce.com internally since our company's inception, so we're customers of this type of service. And for our customers, we've always offered our Strategy Execution software application as a monthly or quarterly service. Based on our experiences and those of our clients, I think there is going to be a huge move to SaaS offerings over the next few years. Let me illustrate with a tale of two projects...
In the fourth quarter of last year we were working with a group at a very large customer that was looking to roll out dashboards across the administrative functions in their geographic region. Ultimately, they decided that data focus and having control of the application was important to them and ended up choosing to use a traditional "slice and dice" BI vendor. They bought lots of licenses, servers, and databases over a period of many months.
By coincidence, in the second quarter of this year we ended up working with the service delivery side of the same company in the same geographic region trying to do something very similar. Except they wanted to focus on accountability and improvement and getting quick results. We ended up working with them to deliver a Strategy Execution system to be deployed widely through most of their region. We delivered the application via SaaS. Their application was immediately available.
Now, at the end of October 2007, the first group is just getting around to mapping all of the data elements they will need to load onto all of the servers, databases, and BI applications they bought. They might be able to do some limited roll outs of the system sometime mid next year. Management is wondering if the team made the right decision.
The SaaS group, however, already rolled-out a functioning system and populated it with data. People are trained. The system will be widely rolled out next month. People understand what business reviews are. They spent less money. Management is pleased with the results.
The point is, the SaaS group will be conducting scorecard-based business reviews in a 1/3 of the time that the other team will take to merely get a functioning system (and I don't think their system will ever end up supporting structured business reviews in the same sense). That's great, but there's more.
Think about this question: How much money could you save or how much more revenue could you make in a year if your management team was 10% better at executing your strategy? In most organizations, this is a huge number. It's usually a huge number with a 5% or even 1% improvement. There are a lot of research results and case studies that show you get even better incremental results with Strategy Execution. The SaaS group from the example will reap that benefit at least a year earlier than the other group. What's that worth?
Yes, yes there are other considerations the traditional business intelligence software group might claim. The value of having all of the data centralized and controlled in a secure internal environment. Having the ability to look at performance data in a million different ways. Having a Data Warehouse. Integrating the system seamlessly into the internal information architecture.
I've already discussed some of the data misconceptions in this blog. We'll be talking about many of these other issues and why SaaS and Strategy Execution will change the way Executives view Business Intelligence, Performance Management, and Software in the months to come.
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