With all the talk about the Cloud and SaaS applications, I wanted to share a few thoughts on the current state of the market, what we can expect in the future, and how best to manage through the transition from the old world to the new.

The market currently offers many world-class SaaS applications to address all phases of business operations. Marketing, Sales, Service, Support, Finance, Supply Chain, ERP, Business Analytics, and Intelligence applications are abundant. Over 25 major CRM vendors are on the market.

We are beginning to see mass specialization. SaaS applications tailored for specific verticals, industries, market segments, and even geographic specialization will become normal. Technology will allow a flood of more highly customized SaaS applications to enter the market at an ever-increasing rate of speed.

The market leaders will continue to offer comprehensive applications that are multi-language capable with full functionality and robust tools for collaboration, workflow, and integration.

What are the benefits of SaaS?

  • Speed of deployment – no software to develop
  • No need to purchase traditional perpetual software licenses
  • No hardware to purchase, maintain, and manage
  • No hardware/software maintenance contracts
  • No application maintenance to worry about
  • No patches to apply
  • Free upgrades
  • Robust APIs that allow you to integrate SaaS applications to existing systems you already own

What are the new skills required?

The skills to integrate all in-house applications with SaaS applications are critical and will become more so as capabilities become more robust. Managing access, identity, and single sign-on is a very hot segment of the SaaS market and will continue to become more and more critical.

When selecting a SaaS application, it is important to make sure that the application meets your current business requirements. It is equally important the company has an agile development process and a product roadmap that clearly shows how the company will grow with your business.

Due diligence should consist of asking many important questions. Ask for an operational review. It is not only important to understand how the application works but also how the company operates the service on a day-to-day basis, how it scales, and how the company manages security, compliance, and the occasional service interruption.

Ask about Service Level Agreements (SLAs), critical certifications such as SAS 70, SSAE 16, PCI and SOX. Research the management team and investors. In summary, execute a full due diligence process. This will make sure you select the best SaaS solution for your company and that there are no surprises.

What’s coming next?

  • IaaS – Infrastructure as a Service. There are many vendors today offering fully configured network gear, application, database, and file servers in the cloud. Imagine not having to buy servers to run day-to-day business operations.
  • PaaS – Platform as a Service. The race is on to market the entire application development and integration stack in the cloud. Imagine not having to purchase development licenses and worry about the software license police.

Will there ever be a day when an entire SMB can run all systems in the cloud? In many cases, that day is here now. I have had the good fortune in recent years to work at several enlightened start-ups that run every major system on SaaS applications in the cloud. All of these SaaS application are billed on — you guessed it — SaaS subscription billing platforms… Can you say BaaS – Billing as a Service?

Learn more about the cloud at the HP/Axcient Cloud Roashow, coming to a city near you starting Feb. 28th, 2012.