Flexible implementation strategies provide a proving ground to weigh the value of SaaS, and cognizance of corporatewide needs can enable deployments that leverage other SaaS products and resources. Service-level agreements, where applicable, can help ensure objectives are met.

The need for speed, flexibility and cost control led holding company OHC to make separate CRM deployments at two of its subsidiaries, IT consultant Optimus Solutions and refurbished computer hardware provider Canvas Systems. By late 2005, both units had outgrown a homegrown CRM system, with its clunky user interface and inability to handle increasing level of data demand, according to CIO Steve McDonald. "We had really gone beyond the expiration date of the original system," McDonald says. "We needed a short ramp to implementation, and a product that was simple to use so the employees would take full advantage and create the benefit intended."

McDonald entered talks with Salesforce, but with some trepidation. In 2005, Salesforce had suffered some outages. It had addressed the problem by upgrading equipment and providing online access to real-time monitoring and maintenance information, but McDonald held off on deployment until he had a clear understanding of service-level agreements for the project and his own IT staff was available to work on it. Then, Salesforce was rolled out in phases across both organizations over two months. "It was a bit of a gamble," McDonald says. "There were some reservations, but Salesforce has done a good job and we have not had a single outage since we went live."

An expanding ecosystem of SaaS providers let McDonald customize OHC's CRM platform. He used the AppExchange, an on-demand marketplace launched by Salesforce in January 2006, to find applications to integrate with and expand the Salesforce platform.

McDonald chose authentication software from Sxip Access to synchronize ID and passwords of its corporate active directory with Salesforce. An application integration program from Cast Iron Systems was used to tie into the on-premise Microsoft Dynamics NAV ERP system. Eloqua marketing management software was added to handle e-mail and Web campaigns. "Our success with this level of integration between SaaS and on-premise applications has led me to go straight to the SaaS market to see if there is an appropriate solution each time we open the books on a new business challenge," McDonald says. "I even find myself looking at my ERP system and wondering, what if there were a Software as a Service package available that met our needs."

SaaS also can be used to supplement on-premise software when an operation needs to scale temporarily. Take, for instance, XM Satellite Radio, which mixed packages of on-demand and on-premise software to help manage its call center operations during peak periods. The subscription radio company had used a handful of third-party call centers employing various software platforms. XM sought to gain control of the operation, so it created a company-operated, 1,500-seat site in Washington, D.C., that runs on Avaya's call-center platform running on its own servers. But during the winter holiday season, the need for customer service reps could double. Instead of licensing more seats, XM chose to use the Avaya on-demand service offering the same functionality at a second site in Ellenwood, Ga., staffed by Avaya-supervised agents.

Tanya Callaway, XM director of technical operations, says the second site allows her to mix and match on-premise and on-demand as conditions change, such as distributing traffic over the two call centers to minimize the likelihood that customers will get busy signals. "I wanted a partner that could provide me a kind of shopping cart where, if I need a particular service today, I don't have to go and source it," she says. "I can just order it off the menu."

The continuing growth in SaaS means more vendor and deployment options for the enterprise. Licensed software will continue to dominate the market, but strategic deployment of service-based applications will find increasing favor in IT organizations.

Ask Your IT Consultants:
Which SaaS vendors have demonstrated longevity and technology advancement?

Ask Your IT Staff:
Where could current SaaS efforts be improved or leveraged with additional SaaS products?