A quick overview of the SaaS model
The SaaS model is often explained by suppliers in primarily technical terms (using terms like multi-tenancy, delegated administration and so on), but the whole picture of SaaS comprises three aspects:
- Licensing: SaaS offerings are licensed using subscription models, rather than perpetual licenses. Customers can get started with SaaS offerings without any up-front capital expenditure, and their investment will grow in line with the number of users and the amount of functionality required. Because the SaaS model is basically a rental model, all customers are paying for is the right to access the functionality provided. Customers don’t own the systems they’re using – the SaaS provider retains ownership.
- Delivery: SaaS offerings are managed services offerings – the provider isn’t only responsible for delivering the functionality; it’s also responsible for providing customers with agreed levels of performance, reliability, scalability, availability and security. Although customers can typically implement their own customisations and personalise the offering to a degree, the underlying functionality provided in a SaaS offering is shared across all customers – and functionality upgrades and revisions are implemented across all customers’ environments according to the provider’s schedule.
- Technology: Much of the hype and interest in SaaS has thus far revolved around the technology required to support the structural and licensing aspects of the SaaS model. The reality is that a technology offering doesn’t have to have been designed and built “from the ground up” to support the SaaS model. Nevertheless, to be most effective, SaaS offerings need to embody design principles that make it possible for providers to deliver a common set of functionality to all subscribers, while allowing them to customise and personalise their own environments; make it easy for customers to identify their own administrators, and provision their own user populations without the involvement of the provider; make it easy for common functionality to be upgraded and revised without breaking customers’ own customisations and personalisations; and lastly, make it cost-effective to serve tens of thousands of customers by avoiding having to serve each customer from an unique, dedicated server (and typically software) environment.
SaaS opportunities for BPM initiatives
Although there’s a lot of hype around, it would be wrong to discount SaaS as a cynical attempt by the IT industry to lure us all into a new round of investments in dead-end ideas. There are clear opportunities associated with using SaaS models for enterprises pursuing BPM initiatives.
Increased stakeholder collaboration
In the context of BPM, effective collaboration between business and IT teams is now becoming better understood as a critical success factor – in early-stage process discovery and requirements analysis, and also in process design and in process monitoring and optimisation activities.
SaaS-based applications provide improved environments for collaboration between different groups and individuals for two reasons: firstly, accessibility – SaaS-based technologies are typically delivered through standard web browsers, and don’t require software to be installed on users’ desktops. This means that people can easily participate in collaborative work from a variety of locations, potentially from multiple organisations, using a variety of computer systems. Secondly, licensing – SaaS models enable companies to scale their investment up and down in line with usage, and fees are typically modest – so if there’s a requirement for 50 business executives (for example) to get involved in a process discovery exercise for 3 months, then the cost of supporting that requirement can be closely tied to the need.
Support for widely distributed work
Rolling out an IT system in a large, distributed business can involve a lot of cost, complexity and risk. Firstly, each business location can require its own infrastructure (whether that’s installed “on premise” in each location, or installed in some kind of shared data centre) – in many cases because of site-based licensing restrictions. Secondly, each business location can require its own local administration and support staff for the IT system. In the context of BPM, dealing with large, distributed business environments poses challenges – not only for these reasons, but also because local change management challenges (enabling buy-in from local management executives and process participants) can be tough to deal with remotely.
SaaS-based applications provide improved capabilities in dealing with large, distributed business environments for two reasons. Firstly, manageability - SaaS-based tools and platforms are hosted and managed by a third-party provider, and the responsibility for all technical administration support issues falls on them. If SaaS-based BPM tools are properly built then user management and process administration privileges can be assigned to a central team initially, and this central team can then delegate these rights to distributed teams of local administrators and managers where required. Secondly, licensing - because SaaS-based tools are typically licensed based on the number of users rather than the number of server hosts or “sites” in use, involving widely-distributed populations of management staff and process participants in BPM efforts can be significantly more cost-effective using the SaaS model than using on-premise software.
One of the most obvious advantages of the SaaS model is its immediacy – with true SaaS offerings, customers can sign up for a service “on the spot” and start using it almost immediately with no software installation requirement of any kind.
Immediacy is one particular area where much BPM technology struggles to really deliver for customers, although in many ways this is hardly surprising – many of the challenges that impact the timeliness of BPM implementations are to do with collaboration, culture and change management, integration, and so on – and none of these things can be done immediately. Nevertheless BPM technology itself can require significant effort to install and configure – and it also doesn’t need explaining that much BPM technology comes with significant price tags.
Challenges of the SaaS model
So it’s clear that the SaaS model has the potential to address a number of the challenges associated with on-premise BPM technology. But the story of SaaS’ potential isn’t completely positive: it also introduces some new challenges, too. We see four in particular:
- Integration: If you’re working with a SaaS-based BPM technology platform, then unless you’re designing processes that have no interactions with existing applications or data sources (and in the real world, this is unlikely), you’ll have to grapple with the challenge of how to integrate with other systems across firewalls – either between the SaaS BPM platform and other SaaS application environments, or between the SaaS BPM platform and your own on-premise systems. This challenge is surmountable, because vendors’ tools do, in general, provide integration capabilities: but dealing with it is likely to involve some engineering effort from IT staff, and there’s some way to go before the integration capabilities of SaaS offerings become as capable as those of their on-premise counterparts.
- Security and privacy: A key challenge associated with SaaS offerings is related to how dependable the SaaS provider can be in the face of potential data security breaches. There’s also the issue of the regulation of the storage of business information, which some governments insist on. In Europe, for example, the Data Protection Directive prohibits the transfer of personal data to countries outside of the European Economic Area (EEA) to countries that do not meet the EU standard for privacy protection.
- Maturity and sophistication: Many of the SaaS BPM start-up providers have some way to go before they’re able to match the levels of functionality offered in on-premise BPM technology suites. For some enterprises this functionality gap might not be an issue; but if you’re exploring a process improvement scenario that demands sophisticated process automation, work routing and prioritisation, simulation, optimisation or integration features then technology from a SaaS-only BPM technology provider is unlikely to fulfil your requirements today.
- Architecture and governance considerations: A challenge concerning SaaS offerings that’s particularly relevant in the context of BPM implementation work is how you drive consistency in the way that models and concepts are represented – both within the BPM environment, but across multiple projects; and across the BPM environment and other application and technology environments. To deliver value at scale and not just at the level of individual projects, BPM initiatives need to drive consistency – otherwise each project can end up “reinventing the wheel”, which drives increased cost and risk. If subscriptions to SaaS BPM offerings are made from within business groups without IT involvement then there’s a significant risk that projects may proceed in a way that delivers good short-term value, but poor long-term value.
These challenges are largely surmountable, but they do all point to a need for IT to get proactively involved in SaaS-based BPM efforts. Staying on the sidelines is likely to lead to a risk of having a suboptimal solution foisted on you, whether you like it or not. Because of the lack of software technology and infrastructure requirements associated with SaaS propositions, it’s easy for business teams to drive SaaS subscriptions without the involvement (and sometimes even the knowledge) of IT teams. Indeed some SaaS providers take advantage of this and make targeting businesspeople an explicit part of their sales and marketing strategies.
Neil is an accomplished IT industry analyst with over 17 years’ industry experience. Neil advises clients on technology and management issues relating to business process management and SOA, as well as enterprise architecture, IT governance, application development and business integration. Neil is a co-author of “The TechnologyGarden: Cultivating Sustainable IT-Business Alignment” (Wiley, 2007) and is a regular speaker at conferences throughout Europe.