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Will software delivered via the Net integrate with your systems? Is the new breed of SaaS providers reliable? Does hosted software truly save you money? The answers might surprise you.
When Salesforce.com experienced a systemwide outage in December 2005, Phoenix Technologies Ltd. and thousands of other companies lost their CRM applications for the better part of a day. Then Salesforce.com had more outages as a swath of new customers signed up to access its software over the Internet -- a delivery model known as Software as a Service, or SaaS -- and overtaxed the system.
The outages rankled several salespeople at Phoenix Technologies, a $100-million core system software provider based in Milpitas, Calif. But CIO Cliff Bell remains enthusiastic about SaaS in general and Salesforce.com in particular. "For the past six months, Salesforce.com has been relatively stable," Bell says. "I wish we could say the same about our Oracle financials."
Yet talk to Steve Canter, CIO at $300-million Berlin Packaging in Chicago, and he'll debunk two of the promises SaaS providers make: better overall user experience and huge savings. After evaluating SaaS vendors over the past three years, Canter found they met neither criterion. This CIO believes his levels of service would actually decrease if he were to use a SaaS vendor rather than his in-house technology.
During his evaluation, for example, Canter asked various providers to explain how they would handle real-world scenarios. "An error that we would immediately recognize and could rectify in about 10 minutes took the best provider an hour to spot and a day to fix," he says. And the lowest-cost provider he could find -- one offering the fewest services as well -- would save Berlin Packaging only the equivalent of one full-time employee.
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