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How to implement a successful SaaS business model

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SaaS apps reshaping face of enterprise IT

As SaaS apps continue to infiltrate the enterprise, they're freeing up precious resources -- and reshaping IT's role.

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Not better, not worse -- just different. That's how IT professionals describe how their jobs change when their organizations move from running on-premises applications to outsourcing to hosted software as a service providers.

It's easy to think that software as a service (SaaS) makes IT's job dramatically easier. Replace an on-premises application with a hosted version, and all of a sudden, IT has one less application to procure, provision, configure, backup, patch and update.

It's also easy to see how that same hosted application could complicate matters -- by hosting IT staff out of a job. If the application doesn't need a person to manage it, then does the organization really need to keep that IT person around?

While hosted applications don't need as much care and feeding as on-premises applications, they do require a lot of up-front architecture and integration work -- and who better to do that than IT? SaaS apps also tend to beget more SaaS apps, which, in turn, beget more architecture and integration work. And someone needs to be left to pick up the pieces if something goes wrong with the hosted app. It all spells a lot of change on the horizon, and IT professionals must think about what role they will play in increasingly SaaS-powered organizations.

Unstoppable SaaS

If you don't think that the world is moving to SaaS, you're living in the wrong decade.

"There hasn't been an on-premises software company funded since 2007," said R. "Ray" Wang, principal analyst at Constellation Research. "You have no choice. It's all going to be SaaS."

According to a recent survey by North Bridge Venture Partners, SaaS adoption grew five-fold from 11% to 74% over the past four years. Meanwhile, the legacy on-premises deployment model is shrinking, according to Gartner, declining from 34% today to just 18% by 2017.

The good news is that the speed and ease that organizations can deploy a new SaaS application brings enormous benefits -- often with little to no impact on IT.

Cedar Fair, which owns 11 independently branded amusement and water parks throughout the U.S., recently began using hosted CRM and email marketing software from Merkle and Salesforce (ExactTarget). Whereas customer data used to be siloed and difficult to get at, today the firm "has much better information on guest behavior [and] more robust abilities to honor guests and market to them," said Daryle Powers, vice president of CRM at the firm.

The amount of work that IT needed to do to make this happen, meanwhile, was relatively minimal. Occasionally, IT will be called upon to provide access to new data capture points, but, for the most part, it has moved on from those platforms.

"IT has stepped away from Merkle [and ExactTarget] -- they don't support any of those platforms," Powers said.

Instead, staff concentrates on maintaining the infrastructure that runs day-to-day park operations: the master database of record, ticket sales, the website, and redemption data.

"It's really freed up their time, and alleviated the need for them to understand customer data and be able to focus on park infrastructure," Powers said.

Alex Barrett is editor in chief of Modern Infrastructure. Write to her at abarrett@techtarget.com.

This was last published in March 2015

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Essential Guide

How to implement a successful SaaS business model

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I’ve been seeing a rather rapid move to SaaS solutions in out IT department, but I’m not really seeing that they pose a threat to IT jobs. I think that, as you suggest, it frees up many of the valuable resources to focus on more productive endeavors. In many instances, we’ve been asked to keep doing more and more with less and less, and invariably productivity and quality of output suffers under the old “don’t worry about the mule, just load him” paradigm. SaaS provides a welcome opportunity to transfer some of that burden to another resource that is specifically designed for that. So, yeah, there will be many benefits and big change for IT.
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@mcorum "don't worry about the mule, just load him" -- pretty much sums up life as an IT person, no? I hope you're right that SaaS can alleviate that burden.
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It's been coming for a really long time, and IT has been talking about 'freeing their IT staff from day-to-day maintenance for years. Time's up.
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I keep hearing this recurring question when I attend/speak at events - "With all this new stuff like microservices, should we consider re-writing our apps?". When asked "what" apps, it's often a set of standard MSFT apps. IMHO, those standard applications will begin to rapidly move to SaaS instead of being renewed/rewritten. Anything that doesn't drive the business topline is a SaaS candidate. Then you'll start to see IT begin to focus on things like how to manage that data in the cloud for audit/compliance.  
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A really insightful article. I agree that whilst hosted applications free up time and draw less on the traditional requirements of IT staff (e.g. programming, updating and security), they will still require skilled staff to manage the up-front architecture and integration work, particularly when it comes to maximising the value in marketing-led solutions. Its clear that this evolution will inform the future scope of an IT employee.

For example, with a 123ContactForm integrated in to a web page (a quick and easy process), you can instantly mine in-depth data about your customers. But it’s when you combine the efficiency and ease of a using a tool like ours with a talented employee who has both technical ability as well a creative mind that you can transform the tools and the big data it offers into fantastic commercial value; it’s a mix of coding skills, data analysis, creativity and business nous in our staff that will really start to make a difference.

Maintaining the infrastructure of the database generated by a web form is important, but that maintenance shouldn’t be exclusive to understanding that customer data.
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