Tuesday, September 26, 2006

Wait. I thought "S-a-a-S" spelled "panacea."

  hat splashing sound you heard at 9:30 this morning was a big, cold bucket of reality being poured on the heads of the SaaS vendors here at SaaScon.

The second morning keynote was a panel featuring not SaaS vendors and pundits, but rather CIOs of "real" companies--companies that buy both SaaS and on-premise software.

Tom Murphy of AmerisourceBergen, Jesus Arriaga of Keystone Automotive Industries, and James Woolwine of Majestic Insurance were the CIOs. Their 45-minute panel was interesting, informative, and grounded in reality.

Are these guys down on software as a service? Not at all. They think it holds great promise for certain applications. But they're CIOs: they're pragmatic, they're realists, and ultimately they're responsible for all of the software that gets implemented in their companies.

They've all had experience with SaaS, and certainly some of it was positive. But they seemed to find that SaaS vendors just aren't owning up to the reality of implementing software. They particularly took to task some of the mantras that SaaS companies repeat ad nauseum: "It's easier to implement," "It's easier to use," and "You can pay as you go and stop at any time."

These CIOs know that implementation is always difficult. Whether that software is running on-premise or not, you still have to integrate with the same systems. Ease-of-use isn't guaranteed just because the software is coming in a browser. And the idea that, when all of your critical data is stored in a SaaS vendor's database and datacenter, you could just change your payroll app one day is, well, ridiculous.

One interesting point: these CIOs wanted different things out of SaaS. Woolwine, the CIO of a $100M insurance company, would love to outsorce e-mail. Murphy, the CIO of a Fortune 100 pharmaceutical supply company, would never dream of outsourcing e-mail.

What do they like about SaaS? Well, naturally, it's ease-of-deployment. For anything that's delivered in a browser, there's no install, and that's nice.

But, for them, installation on desktops isn't the hard part about an installation. Integration with existing systems and the training of users on the system are two huge components of any roll-out, and those feel the same for them whether it's a SaaS system or not.

They raised two big concerns: first, data. Not so much security, but who owns it? What happens when the vendor goes out of business? What happens when the contract ends? It's a big concern.

Second, Murphy doesn't like the idea that software can be updated "underneath" him. He's got tens of thousands of employees, and the training and education necessary for rolling out new versions of software is a difficult task: they have strict procedures in place. His question for SaaS vendors: how do I control upgrades and updates? With all of the vendors here preaching "one code base" and "multi-tenancy," it's a great question.

Ultimately, as I said, these guys weren't negative about SaaS. But to them, it's just a delivery model. It's still software. It's got the same difficulties.

Photo credit: justcola

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