SaaS brings many benefits; however, key controls are required to properly balance flexibility and adaptability with corporate needs for consistency and control.

1. • Cognizant 20-20 Insights
Speed, Agility: The SaaS Killer Apps
Executive Summary Organizations that have deployed SaaS find its
greatest benefits are the speed with which they
Buying software as a service (SaaS) helps
can deploy or decommission applications (or
companies compete by democratizing, decentral-
change the number of users accessing them) and
izing and speeding application deployment. SaaS
the agility SaaS gives them to target new markets
allows local business units to quickly identify and
or support new products and services.
deploy the applications they need to meet ever-
changing business requirements. However, the The specific speed and agility benefits customers
unrestricted freedom to deploy and customize cite include:
SaaS applications can lead to inconsistent
processes and data that can harm the business • Faster budgeting: In many companies,
and result in the same high maintenance costs approval for capital spending involves far
that plague in-house applications. more management scrutiny and long-term
planning than for “expense” spending. Because
In our work with SaaS providers and customers, SaaS applications can be paid for as an
we have identified the key controls required to operational rather than a capital expense,
properly balance flexibility and adaptability with getting budgetary approval for them can be
corporate needs for consistency and control. considerably faster than for in-house appli-
As we describe below, these include program cations, which are typically capitalized and
and data management to ensure data integrity, depreciated.
process consistency and reduced ongoing main-
tenance costs across SaaS implementations. • Faster deployment: Once the new applications
are funded, the SaaS model allows companies
SaaS: The Business Upside to deploy them far more quickly than applica-
The move to SaaS is being driven, in part, by tions that are hosted in-house. There’s no need
forces such as globalization; the virtualization to order, wait for, set up and configure hardware,
of teams, processes and platforms; the rise of software and storage, since that infrastruc-
millennial workers; and cloud technology. These ture is all managed by the SaaS provider. The
trends enable more agile and flexible ways of only requirement for going into production
working internally and externally with business is a purchase order (or even a credit card) to
partners and customers. But to reach new levels obtain the number of “seats” required, enter
of effectiveness, organizations need to quickly or upload data from their existing systems and
and adeptly scale their operations, infrastructure perform any required user training.
and investments to meet ever-changing business For instance, compared with the 18 months it
conditions, even as the global economy recovers. took to develop a service and support appli-
cognizant 20-20 insights | july 2011

2. SaaS Takes Off
$119.1B
$120
$100
Billions $80
$60
$40
$20 $32.3B $40.5B
$40 5B
$40.5
$20.6B $25.8B
$13.1B $16.4B
$0
2009 2010 2011 2012 2013 2014
SaaS Growth by Year
Total new software purchases
Source: IDC
Figure 1
cation internally, the consumer business • Decentralized, democratized application
unit at Symantec Corp. was able to deploy selection: In more complex organizations,
Salesforce.com within eight weeks, says Troy the business units closest to the market
McKaskle, CTO of Symantec’s Services Group. often have the best view of customer needs,
“There’s no way we could as well as what software they need to serve
Starbucks uses SaaS get thatwith an speed and
agility
sort of
internally
customers. SaaS gives these business units
the power to choose applications and the
applications as a hosted application,” he says. responsibility to pay for them, creating a
complement to on- “It can take that long just to powerful incentive for them to invest only in
get hardware approved.” applications that deliver business value. It also
premise software allows these business units to meet new
SaaS also makes it much
to provide e-mail customer or market needs without waiting
easier to adjust the amount
communication, instant of software an organization for the central IT organization to develop and
deploy a new application.
messaging, document uses and its correspond-
ing costs, as the workforce
sharing and other • Ease of upgrades: Running the latest version
changes. Starbucks, for of an application helps ensure that users get
services for its retail example, uses SaaS appli- the most functionality, as well as minimizing
employees. cations as a complement security and compliance risks. Because SaaS
to on-premise software to vendors handle such upgrades, with no need
provide e-mail communication, instant mes- to take the application off-line for mainte-
saging, document sharing and other services nance, upgrades are automatic and can occur
for its retail employees, says Ray Mohrman, as often as four to five times per year rather
unified communications specialist at Micro- than only once, and at no added cost or risk to
soft. The company’s core “knowledge” users user productivity.
are still served by on-premise systems, he
says, which are integrated with Microsoft’s • Ease of modification and enhancement:
online business productivity suite to elimi- Because SaaS applications are deployed and
nate what had been paper-based processes. managed by the SaaS provider, administrators
This not only saves money but also allows the and users can modify their appearance and
retailer to add new retail staff quickly as busi- function without customizing the source code or
ness conditions change. performing expensive, time-consuming testing.
cognizant 20-20 insights 2

3. In addition, says John Reinke, vice president of tomizing the user interface for the various
CRM for Oracle, SaaS applications are designed roles within an organization, such as a
to be easily changed and molded on the front channel manager, a telesales representative,
end by business users and business analysts or a field enterprise account manager or a vice
sales administrators rather than by expensive president. “Those kinds of things are very easy
and overbooked programmers. to do without having to get at the base code,”
she says. “You can just tweak what field you
The developer communities that have grown
display and what type of reports you offer.”
up around popular SaaS products often make
it easier to find add-on products that provide • Data management: Without consistent, accu-
specialized functions than for packaged, rate and timely data, no application can work
internally hosted applications. (It is still best effectively. That’s why SaaS veterans recom-
practice, though, to analyze your current and mend a master data standard to ensure that
future requirements to ensure you can get the different business units have the same defini-
functionality you need.) tion of key data elements, such as, “customer”
and “order.” The standard
• Focusing on strategic work: In many orga-
should also spell out what The developer
nizations, maintaining the existing infrastruc-
data should be backed up communities that have
ture can consume up to 80% of the IT budget.
from the SaaS provider to
By eliminating that routine work, SaaS frees
the customer, how often
grown up around popular
IT staff and budget for projects that improve
and in what format so SaaS products often
business processes or produce analytics that
it can be used by other make it easier to find
boost the bottom line.
applications if needed.
Tampa General Hospital, for example, views Customers also need a
add-on products that
SaaS as a way to focus their efforts on improv- plan for recovering their provide specialized
ing the management of medical records, imple- data at the end of the functions than for
menting ERP or “new products, new solutions engagement, if needed.
and new components to the business,” says packaged, internally
Microsoft’s Morhman. A data management plan hosted applications.
should also address the
Mitigating Challenges and Risks logistics of getting users the data they need,
While SaaS applications offer compelling when they need it. Pharmaceutical sales reps,
improvements in speed and agility, organiza- for example, need very large data sets of
tions must deploy them with proper program and customer purchase histories that are
data management to ensure that processes and refreshed often, Reinke
says. “Sometimes,” he
information are provided consistently across the
says, “it becomes very
While SaaS applications
organization. Key areas to consider include:
unwieldy to just get the offer compelling
• Customization: Limiting customization avoids data from their on-prem- improvements in
ongoing maintenance, inconsistent process- ise systems to a third-par-
es and other risks and expenses, and was a ty vendor’s cloud.”
speed and agility,
strong recommendation from SaaS providers organizations must
The plan should also
consider the costs and deploy them with proper
and users.
“I’ve seen many customers that have taken performance impact of program and data
a SaaS CRM system and made it overly putting too much data
complex,” says Oracle’s Reinke. “They’ve made
management to ensure
in the cloud. “Some
it unusable, they’ve made it slow and unwieldy, customers degrade their that processes and
they’ve made it as expensive as — or even own ability to be nimble information are provided
more expensive than — on-premise software.” with the SaaS application
With too much customization of a SaaS appli-
consistently across the
environment because they
cation, he says, “You can still make it ugly are essentially archiving organization.
and unusable by a sales rep; you can make years and years of data,”
it so complex that people can’t figure out how says Ruliffson. “We encourage customers to
to use it.” determine how much of their data users need
Erica Ruliffson, group vice president of CRM to access on a regular basis” and storing only
On-Demand for Oracle, recommends cus- that data in the cloud.
cognizant 20-20 insights 3

4. •
Integration: No application is an island, training and change management. A program
especially when so many enterprises rely on management office can help ease the process,
outside companies to sell, especially for larger companies with more
Companies should manufacture or service their divisions, which risk creating “SaaS sprawl.”
make sure their SaaS products. SaaS applications By serving as a bridge between the business
may need to be integrated and IT, a program management office can help
provider offers robust, with legacy on-premise mediate requests for configuration changes
public APIs to meet software or other SaaS appli- to ensure organizations get the full benefits
current and future cations to support today’s dis- from SaaS without letting customization get
tributed business processes. out of hand, says Ruliffson. The most effective
integration needs. Companies should make sure program management offices, she says,
their SaaS provider offers combine business and IT representatives.
robust, public APIs to meet current and future
“We put a governance structure in place
integration needs.
that says anyone who wants to customize
Just as Starbucks is using the Salesforce application has to justify it to
A program a blend of on-premise and a cross-functional board, with two represen-
management office SaaS Microsoft applica- tatives from IT, with the rest from various
can help ease the tions, Oracle is seeing many business units such as sales, marketing and
hybrid or blended CRM support,” says Symantec’s McKaskle. Ninety-
transition to SaaS, deployments, says Reinke. nine percent of the time, the requests can
especially for larger Unwilling to repeat the work instead be met through a simpler, less main-
companies with more of populating on-premise tenance-intensive configuration of the user
CRM systems with business interface, he says.
divisions, which rules or integrating them
risk creating “SaaS with other applications,
• Data and application security: Once a
red flag for SaaS, security challenges are
sprawl.” customers are linking their
rapidly becoming less of a concern for many
on-premise systems with
companies, particularly since many providers
SaaS applications that meet fast-changing
have achieved SAS 70 certification, which
business needs.
means they can provide a level of security
• Performance and availability: Companies certified by an outside auditor.
should be careful to write their SLAs properly
when they first engage with the vendor, being Moving Forward
sure to include milestones, specific measures Change in business is happening at rates we
such as downtime and appropriate penalties have never seen before. To succeed, companies
for non-compliance. must be exceptionally nimble, with the ability to
enter and exit lines of business very quickly; limit
• Licensing: Companies should check to see if
capital investment to preserve flexibility; leverage
they can re-use licenses for software already
running in-house or in the cloud. They should the most current technology to gain competitive
also ensure the ability to scale down the advantage; and apply the most effective infor-
number of users without penalty, as well as mation tools to drive employee productivity and
easily view usage and other metrics. satisfaction. SaaS enables organizations to gain
more bang from their IT investments by creating
• Program management: Although it boosts an adaptive platform that flexes as business
speed and agility, SaaS can still involve changes requirements dictate.
to user interfaces or processes that require
cognizant 20-20 insights 4

5. About the Author
Charlie Goldenberg is Vice President of Cognizant Business Consulting (CBC), with responsibility for
management consulting services delivered to the technology industry. He has more than 30 years of
management consulting experience and was previously a partner with KPMG Consulting and Deloitte
Consulting. At Deloitte, Charlie led the U.S. high-technology industry practice. He also was responsi-
ble for several of Deloitte’s most important technology client relationships, including Microsoft, Sun
Microsystems, Cisco and Intel. After leaving Deloitte, Charlie was a partner with Mercer Management
Consulting, where he helped establish relationships with several major technology clients, including
Symantec, Intel and HP. He started his consulting career with Booz & Co. Charlie can be reached at
Charles.Goldenberg@cognizant.com.
About Cognizant
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