To cut through all the hype, confusion and uncertainty surrounding cloud computing, just focus on software as a service or SaaS . This tried and true cloud model offers a simple value proposition: Partner with a third-party service provider that manages and maintains a key software solution and delivers the capabilities via secure Internet connections to every end user who needs it.
The SaaS model gives users the applications they need in the latest versions and makes them available wherever and whenever required — in traditional workspaces, at home offices or to users in the field. At the same time, because the internal IT department isn’t devoting resources to support SaaS-based apps, organizations can lower their capital expenditures (CAPEX) and free their technology staffs to devote more time to enhancing mission-critical systems and responding to changing requirements.
Keep in mind, while SaaS may be gaining in acceptance, there are no guarantees for success with any technology approach. Organizations need a clear strategy from operational and technology perspectives to determine where SaaS fits best and how to capitalize on its full potential. Here’s what to consider and a plan for getting started with cloud apps.
Entities of all sizes and across industries have come to understand the importance of SaaS benefits. “Organizations are now coming to us and asking for cloud-based solutions,” says Aaron Anda, inside solution architect for cloud at CDW. “In the past, we might have had to explain why a cloud-based solution  was the best option to meet a customer’s requirements.”
Global spending on SaaS solutions could reach $32.8 billion by 2016, up from just $13.5 billion in 2011.
SOURCE: Public Cloud Services, Worldwide, 2011-2016, Gartner, February 2013
The latest market trends show that SaaS acceptance is widespread. Technology researcher Gartner says the SaaS market will grow steadily at 19.5 percent a year for the next three years. Much of the growth will be fueled by organizations in North America, 73 percent of which plan to expand their SaaS spending over the next two years, a Gartner study notes.
SaaS fills a clear niche in the larger assortment of cloud models. By delivering full versions of commercial apps from a third-party service provider, it eliminates many costly infrastructure expenses, including the physical space, servers, power and cooling systems and staff to manage and maintain the solutions, says Anil Desai, an independent IT consultant in Austin, Texas.
Prenegotiated SaaS subscriptions offer predictable costs. That makes financial planning easier. And they are typically paid for through operating budgets, which can be easier to justify than capital spending for big-ticket infrastructure components.
SaaS benefits extend beyond economic considerations. Organizations can adopt new or expanded capabilities by simply subscribing to them, which can cut months out of traditional acquisition processes for on-premises solutions. “Organizations can use SaaS to adapt more quickly to changing requirements, which can make them much more competitive,” says Laura DiDio, principal at the IT consulting firm ITIC.
For these reasons, organizations of all sizes are using SaaS programs for a wide variety of solutions, including a handful of applications that CDW’s Anda calls the “low-hanging fruit.”
Popular SaaS solutions include productivity applications, such as Microsoft Office 365  and IBM SmartCloud Docs. These provide anytime access to word processors, spreadsheets and other essential modules. And because documents can be saved to the cloud as well as locally, end users aren’t dependent on always having an Internet connection. They can work offline and then push revisions to the cloud as soon as an Internet connection is available. As a bonus, the IT department doesn’t have to devote resources to regularly upgrading or patching the solutions.
The rise of mobile computing and working remotely has accelerated the push to SaaS email solutions, Anda adds. “People have grown very comfortable with cloud-based email solutions because they make it possible to access messages effortlessly on any computing device.”
Collaboration tools are another go-to SaaS category. Examples include the Box collaboration suite and Citrix ShareFile. These cloud-based options help alleviate email in-boxes being stuffed with large files.
“To share a presentation or other large file with someone, you don’t attach it to the message, you send a link to a folder in the cloud,” Anda says. And unlike consumer-oriented cloud storage apps, the storage resources associated with these collaboration suites provide a management console for IT administrators for securing the content, revising access rights and quickly closing down accounts if a user leaves the organization.
Other popular SaaS solutions include customer relationship management (CRM), mobile device management (MDM), security and business continuity apps.
Although SaaS options cover a wide range of application areas, it may not be the best choice for some types of solutions. Organizations that use proprietary or highly customized on-premises programs often choose to maintain those environments in traditional internal data centers or move them to a private cloud.
The reason? The multitenancy designs that are a foundation of SaaS mean that multiple customers share the same servers, applications, databases and storage resources. As a result, customers are typically required to keep customizations to a minimum. In addition, applications that exchange data and share operational processes with other applications may create integration challenges in a SaaS environment.
“You run the risk of siloing your data with SaaS,” Desai says. “You may have a software as a service application that works great for the marketing group. However, if sales eventually wants to use some of that information, you may need to purchase more licenses or download the data to an on-premises repository.”
Legal and compliance considerations are another important factor for organizations that are subject to laws that require sensitive data be stored in house or at the least within state or country boundaries.
As SaaS and best practices for using it have matured, one of the bigger concerns — security — has been ebbing. “I am hearing fewer concerns about that today,” Anda says. “SaaS is becoming more trusted as time goes on — as major cloud providers are upfront about security practices and their compliance records.”
Nevertheless, some infrastructure considerations are still part of the decision-making process. Network performance is a prime area. “The vast majority of these SaaS applications are written to be lightweight on the client side, to keep bandwidth requirements low,” Desai says. “But some types of applications — ones that stream high-definition video, for example — need ample bandwidth.”
When assessing whether a bandwidth boost will be needed, the IT team should look beyond headquarter operations. “Also consider the requirements of remote and branch offices, as well as people working from home,” Desai says. “Look at everybody’s ability to access the application. This isn’t an issue that’s unique to software as a service, but it’s vital when you are relying on web-based applications and Internet access.”
Some managers fret over getting locked into a particular SaaS provider, which may entail two aspects of a cloud-based model. First, because some or all of the customer’s data will reside in offsite data centers, a process should be in place to make information readily available if the entity decides to switch providers or return to an on-premises solution.
“The terms of the agreement should explicitly state that the content is yours; you own it,” Anda says. “And at the end of your agreement, the SaaS provider should have a clearly established amount of time within which it must export the data in a common format.”
A second aspect of lock-in is contract length, which typically runs 12 months. Although free to move on without penalties if they choose once the contract term expires, organizations should understand upfront that they may incur financial risks if they want to back out sooner.
“Although the contract fee may be sold on a per-user, per-month basis, it’s typical for service providers to require the full payment of a 12-month subscription upfront,” Anda says. “When you pay the lump sum, you probably won’t receive a rebate if you switch before that year is over.”
The good news is that none of these potential challenges require putting the brakes on SaaS strategies. “Software as a service has been around for a while now, so from a technical standpoint I wouldn’t say that anything is a complete deal breaker,” Desai says.
Nevertheless, experts say that CIOs and IT teams will want to focus on five critical areas to help ensure success:
SaaS is so easy to launch that, in theory, all a manager needs is a corporate credit card and a willing service provider. This flexibility can quickly result in what some in the industry refer to as “rogue IT,” where new services come into the entity without the approval of the CIO.
The danger is that the new solutions won’t conform to security, regulatory and compliance policies essential to the organization. Unregulated SaaS may also undermine cost savings if unmanaged acquisitions result in duplicate or unnecessary services.
The best defense for IT managers is close communication with program peers to stay abreast of the latest opportunities and challenges and to make sure the right solutions can be implemented quickly. “CIOs should regularly talk to users about their pain points — what’s working and what’s not in the current environment,” DiDio says.
Based on talks between IT and stakeholders, CIOs should map out how to use SaaS as a strategic resource. Document how much time and resources the IT department is spending to maintain key applications, including upgrades and security patches.
“Then ask whether it is more mission critical to have your valued IT staff, which may already be wearing many hats, focused on innovating new solutions. This will help you see where SaaS fits in best,” Anda says.
“One mistake that decision-makers make is to just look at their organization as it exists now,” DiDio says. “You have to look at trends over the next few years in terms of anticipated head count and what that will mean for the applications you run and how much bandwidth you will need.”
The IT department should estimate costs of the SaaS solution over time by accounting for total cost of acquisition and total cost of ownership (TCO). “Show where the ROI comes in,” DiDio says. “That will help make SaaS part of the overall IT roadmap, rather than just a piecemeal option.”
Although the individual terms of standard SLAs may not be negotiable, CIOs should pay close attention to the frequency of scheduled outages and how service providers will communicate about them. The contracts will also spell out the monetary penalties that result if performance and availability rates aren’t within accepted levels.
Prior to signing a contract, determine whether the SaaS provider will offer real-time performance monitoring and what specific policies the provider will follow to ensure security and compliance. “Vendors also should provide a statement related to their compliance with various government regulations,” Desai notes.
Based on discussions with stakeholders, pick an appropriate SaaS app that can demonstrate the larger potential of the cloud computing model for the organization.
“Those first applications are going to be the test model, so you want to get them right the first time,” DiDio says. “Ideally, if you’ve done all the necessary due diligence then you should be in good shape.”
Get more information about SaaS-based backup solutions at www.cdw.com/saas