I’m a big fan of Google Alerts and have about a dozen set up, many to search for terms related to CRM On Demand, Oracle, and the like. My monitor for “software as a service” picked up a nice new paper published by Forrester Research which details a lot of the same things we’ve said here on the podcast and in conversation with customers and prospects.

You can find the article here (full paper with free subscription).

Robert and I had a lengthy discussion in our October, 2009 podcast “SaaS Talk“. We touched on a lot of the same content and reached a lot of the same conclusions. I’m going to just summarize a few points that stuck out to me.

The SaaS Benefit

I agree with Forrester that rapid deployment is one of the biggest benefits most companies expect from a SaaS solution. Indeed, offerings like CRM On Demand are built to be used immediately upon activation. This is a very attractive idea, especially to an IT executive who is used to spending hundreds of thousands of dollars (or more) and several months on CRM systems implementation.

Of course, the ideal of fast implementation only becomes a reality (and therefore a benefit) when companies intelligently deploy these applications. “What, you mean some don’t?” Shockingly, that is so. Generally this is because they assume a whole lot. And my soccer coach once told me that if you ASSUME, you make an A** out of U and ME. (Sorry)

Assuming that a SaaS product that CAN be deployed quickly and cheaply WILL be deployed quickly and cheaply is the sin here. Companies need to know what they are getting and in some cases accept some inherent tradeoffs. I’ll come back to this idea later.

The Numbers

One thing these research papers do well is coming up with numbers! I think the analysis of the SaaS costs is pretty good and the resulting generic ROI analysis in this report is solid.

This paper doesn’t spell out what is included in the year to year benefit in their ROI study, but allude to cost savings in various areas (hardware & associated resources, legacy maintenance costs, etc). The example in the report estimates a 20% return on investment with payback in 12 to 24 months for SaaS CRM. Not bad!

What many companies fail to consider in their cost calculation is that it’s often much harder to fully retire legacy on premise systems as quickly as you’d like. I’ve seen this in many implementations and imo it’s a fact of life that “entanglement” with any system gets harder to unwind the longer it is used.

There’s also the possible cost of ancillary applications. If the system being replaced had a very broad footprint, perhaps serving sales, marketing and HR functions, then a single SaaS solution may only cover part of it. Additional functionality may need to be added or other vendors brought in to complete the picture. I think this is becoming less of a concern as products like CRM On Demand expand their offerings, but deserves some consideration.

Companies that take an expansive and realistic view of the costs and benefits of SaaS will doubtless still come to the conclusion that there’s a real, tangible advantage.

SaaS Panacea?

Is SaaS the answer to every problem? Unfortunately not. Sorry!

The paper hits on it in several areas, but the core message is clear. SaaS won’t solve your user adoption or change management issues. Applications like CRM On Demand do offer an inherent advantage, however, in that they are designed around familiar web concepts which make them easier to use and lessen the need for extended training. Unless you go off the farm with your business processes or integrations, then most users will be able to pick it up quickly.

But as we discussed in our recent User Adoption Podcast, there’s so much more to successful CRM than the technology. Kudos to Forrester for pointing this out.

The more you know…

The last item I want to comment on is something that is threaded through the report. Most SaaS applications, including CRM On Demand, function differently than their on premise brethren. CRM On Demand is built around some core business processes and offers a range of functionality that will be more than enough for most organizations. But highly complex and customized processes may find it a tough fit.

The better you know the application, the better you can assess the fit and the ability to leverage the native processes to do the same job. Assuming that the application functions exactly like the legacy system is a quick way to lengthen your deployment and blow your project budget. Companies that spend time learning about the application, take an iterative approach to deployment, and invest in expert guidance will be much more likely to garner the benefits detailed in this report.

Let me know what you think by leaving a comment below!

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