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Forrester: As SaaS matures, buyers face new considerations

Liz Herbert, analyst, Forrester Research

As SaaS (software as a service) gains in maturity and popularity, enterprise IT buyers will have to grapple with a new set of questions and considerations when purchasing it, according to a new Forrester Research report.

The report by analyst Liz Herbert identified five key areas of change for SaaS: Industry specialisation, embedded analytics, orchestration of multiple services, social networking and mobility.

“Some industry solutions will go beyond encapsulated best practices and code templates to include bundles of applications, either in a preconfigured, ready-to-go solution or in a cloud orchestration or marketplace model for a specific industry,” Herbert said. But the catch for buyers will be higher costs, sometimes significantly so, she added. “For example, some microvertical solutions built on NetSuite sell for four times the cost of NetSuite.”

Analytics have become intrinsic to SaaS offerings and are being delivered “in context with tasks [users] are working on,” Herbert said. “For many organisations, the most valuable analytics will include industry- specific benchmarking data to compare themselves against, which some SaaS providers are starting to provide.”

“However, for the most part, SaaS applications focus on reports and not true or more advanced forms of analytics, meaning that customers may still have to investigate specialised tools,”  she added.

“Meanwhile, customers who want to run a series of SaaS applications will have more choices regarding how to manage them,” Herbert predicted.

“Faced with the proliferation of SaaS applications and smaller, often riskier vendors, some firms want a simpler solution that will provide a single point of responsibility for contracting, billing, provisioning, support, integration, upgrades, and testing. Right now, vendors such as Hewlett-Packard are offering such services but for the most part they are one-off, ad hoc arrangements. However, buyers can expect this model to mature,” she added.

The orchestration trend will grow along with the rise in enterprise application Web stores, which allow customers to easily buy add-ons for their SaaS applications, According to Herbert. “But both channels carry elements of risk, such as vendor lock-in,” she added.

SaaS buyers also need to ensure their providers have a strong social media strategy and capabilities, according to Herbert.

“Leading firms recruit through channels such as Facebook and Second Life and talk to customers through Twitter and Facebook. Sourcing executives must look for solutions that can integrate social information into traditional sources of information, including analytics that can take a 360-degree view of employees, customers, and products,” she said.

Finally, customers should take care to understand how SaaS vendors currently or plan to support mobile deployments, according to Herbert.

“Mobile is still a newer trend for most SaaS solutions. Cool and innovative features may not have much value if your workforce has older devices,” she said. “But over the next 10 years, falling prices, advancements in battery life and high-speed coverage as well as other factors will drive mobility to the forefront,” she added.

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