April 16, 2009 - 10:23 A.M.
Lisa Hoover

You can’t spend more than five minutes on the Internet these days without bumping into the term Software as a Service (SaaS). As software licensing gets more expensive and budgetary belt-tightening becomes a necessity, companies are turning to SaaS as a way to save money, but some CTOs worry about its reliability. As with with most evolving technology, people either love SaaS or hate it. Meet Amy Wohl. She loves it.

Businesses often choose Software as a Service options when they can’t afford to purchase expensive applications or don’t want the responsibility of managing and maintaining the software they need. Since most SaaS providers offer pay-as-you-go systems, it’s easily scalable and more affordable than over-buying infrastructure you may not need. Essentially, it’s an opportunity for businesses to rent software and farm out the hassle of owning it to someone else.

Wohl is president of consulting firm Wohl Associates, and routinely advises businesses on how to make the best use of new technology, cloud computing, and SaaS in the workplace. She also wrote “How to Succeed at SaaS: Computing in the Cloud,” a book that takes an in-depth look at how business owners can implement these strategies within their own companies.

Wohl is scheduled to give the keynote address at 35th International Computer Measurement Group annual conference in Dallas, TX  later this year. Her topic, “The Impact of Software as a Service (SaaS) on the Enterprise Data Center” will look at how and why companies are implementing it as a solution to dealing with the impact the economy is having on IT. I caught up with Amy to pick her brain a bit about what companies need to know about this rapidly evolving Web service.

Given all we hear about SaaS these days, it seems as if it came out of nowhere and shot to popularity overnight, but Wohl says that simply isn’t the case. The concept actually began to take shape in the nineties and has been slowly shepherded along ever since by companies interested in its success.

“[N]ew companies kept adding themselves to the mix as the business models evolved and the idea became more popular because it became easier to use,” says Wohl. “Analysts who project market shares think that the SaaS market will account for about 27-30 percent of all new software sales in another three to four years. The tough economic cycle may, in fact, accelerate acceptance of the SaaS model because it allows companies to implement sophisticated software without making capital investments or having much in-house skill. SaaS will keep adding applications and growing.”

If you’re sold on the idea of SaaS but having trouble convincing your conservative CTO to take the plunge, Wohl recommends getting references from other companies that are using it successfully because if you end up choosing SaaS as a solution, “obviously the risk is much smaller. It’s even more obvious if that reference is your competitor. Of course, if you want to get out in front, your managers will have to be willing to be more aggressive and then IT will have to qualify SaaS providers so that they can identify the ones that are likely to be good partners.”

What makes a good partner is a matter of individual preference. Although usually Salesforce.com trips off the tongue as the SaaS industry leader, Wohl says there are plenty of “hidden treasures” out there if you look for vendors that target your company’s particular niche. For businesses that only want to dip a toe in the water, Google has a collection of free productivity apps you can try. If you fall in love with them, Google has a supported version that will only set you back $50 per year.

“As for services, Amazon's cloud infrastructure services are probably the best known and most widely used,” says Wohl. “You might also want to consider eBay's [business] services for auctioning and selling products online. [It’s] not thought of as a SaaS service although, of course, it is.  And now we are starting to have a number of larger players such as IBM, Microsoft, and others enter the cloud infrastructure and service management business, potentially altering and expanding the game.”

Despite its rising popularity, SaaS is often viewed as something designed only for small and medium businesses (SMBs). Actually, bigger companies have understood its value for a long while now. Wohl says, “Departments in large organizations have used it to get a fast start for projects which would have taken years to wend their way through IT. Many SaaS companies today are focused not on the SMB market, but on the enterprise, realizing that they can make much bigger sales if they can meet the higher service and support requirements of enterprise customers.”

Whether you’re still on the fence or think SaaS is the best thing since sliced bread, it’s certainly not a business option that can be ignored. There’s a lot that goes in to changing your resource configurations and software, and Computer Measurement Group’s Dr. Michael Salsburg says it’s one of the mail reasons SaaS was chosen as a key topic for its annual conference.

“Cloud Computing is a platform from which more and more applications will be available as a service.  Given that fundamental direction, CMG professionals are extremely knowledgeable about measuring, analyzing and predicting the the quality of service that is delivered from the cloud.  For example, if an enterprise decides to transform themselves so that their capabilities are available as a service within a public cloud, there are many issues to understand, such as the proper placement of data, or the impact of being placed in a multi-tenant environment.”