SaaS and Cloud Computing: New Benchmarks for IT

A growing number of organizations are adopting Software-as-a-Service (SaaS) and cloud computing services to augment or replace their legacy software and systems, and many IT organizations are also beginning to recognize that they can learn how to better manage their operations by mimicking the success of these on-demand services.

THINKstrategies’ most recent survey of over 100 mid- and large-scale organizations worldwide, conducted this past October in conjunction with Cutter Consortium, found that the proportion of respondents using SaaS applications had nearly doubled from 32% in 2007 to 63% in 2008.

In addition, nearly 100% of the survey participants were satisfied with the benefits they’ve gained from their SaaS solutions, and over 90% planned to renew their subscription services, expand their use of SaaS and would recommend SaaS to their peers.

With this type of track record of success, it’s no wonder that IT organizations are not only accepting SaaS and cloud computing as a viable alternative or augmentation to their existing software and systems, but are also seeking to determine what lessons they can learn from the way SaaS and cloud computing vendors operate.

In particular, enlightened IT executives and staff want to know how companies like Salesforce.com, Google, YouTube and Amazon design their applications, architect their service delivery infrastructures, and manage their data center operations.

These on-demand service providers are delivering high-value solutions at an extraordinarily low cost, making them the envy of CIOs at many of the largest companies in the world.

Recently I had the opportunity to listen to Bechtel Corporation CIO Geir Ramleth speak about how his IT team is transforming the way his company leverages technology and business applications by modeling their operations on the leading online service companies, rather than traditional enterprise organizations.

Ramleth’s team decided that today’s commercially available SaaS and cloud computing solutions couldn’t meet their corporate security requirements, but their operating model was still worth imitating. As a result, Bechtel has adopted agile development techniques and is leveraging Web 2.0 tools to accelerate its software deployment process. It’s standardizing its systems and leveraging more flexible virtualization technologies.

By benchmarking their operations against the leading on-demand service providers, Ramleth’s team has dramatically increased end-user productivity and significantly reduced operating costs. It has also succeeded in better aligning the IT operations to more effectively support the company’s corporate objectives.

Given the severe budgetary constraints most IT organizations are going to be facing as a result of today’s unprecedented economic crisis, other IT decision makers should follow Bechtel’s example and quickly determine what lessons they can learn from the leading on-demand service providers.

Kaplan is Managing Director of THINKstrategies (www.thinkstrategies.com), an independent consulting firm focused on the business implications of the on-demand services movement. He is also the founder of the SaaS Showplace (www.saas-showplace.com) and Managed Services Showplace (www.msp-showplace.com). He can be reached at jkaplan@thinkstrategies.com.