Midsize CIOs See SaaS In Their Future

Research firm IDC recently increased its projection for SaaS growth in 2009 from 36 percent to 40.5 percent, year-over-year, a rare instance of a statistic heading in a positive direction these days.

In addition, 76 percent of U.S. organizations will use at least one SaaS-delivered application for business by the end of the year. Also, the percentage of U.S. firms that plan to spend at least 25 percent of their IT budgets on SaaS applications will increase from 23 percent in 2008 to nearly 45 percent in 2010, according to IDC.

The trend is no surprise to some midmarket CIOs such as Earl Monsour, director of strategic information technologies at Maricopa Community College District, Tempe, Ariz.

Maricopa CC hasn't implemented any SaaS applications yet, but the key word is 'yet,' Monsour said.

"We are very serious at looking at it in the future. Anything from desktop applications to whatever anybody needs," Monsour said. "The multitude of 10 colleges' needs are as varied as the number of people that work here and the number of who come here."

Fitting the capabilities of a cloud-based software application into his environment is the challenge, Monsour said. "We need to make sure we have the right access, that we're meeting our obligations and legal requirements. I won't say they're concerns but those are considerations."

Monsour noted that the college recently added Google e-mail features for students, but he's not ready to do that for employees. Overall, any SaaS deployment would also have to be more efficient than an existing solution, he said.

"If we incur more costs in one application, but increase efficiency or deliver a new service, that's something to consider," he said. "One of the issues I see, it's my personal opinion, is it's hard for a nontechnology company like us to keep up with the advancements in the applications. We can't respond quickly enough, especially when you have 19- and 20-year-olds who want everything yesterday. Customer service is a major issue."

Meanwhile, A&W Food Services of Canada deployed its first SaaS solution about three years ago, a restaurant management system for the company's franchises, to great success, said Jim Williams, director of IS at the Vancouver, B.C.-based company.

"We were looking for a solution that was tried and proven, as opposed to developing something ourselves. It was cost-effective," he said.

Eighty-five percent of A&W's franchises now use the software, he said.

"In a franchise world, if you want people to do something, they have to see something in it for themselves," he said. "It wasn't difficult because it was tried and proven. We committed a number of resources to sign up and get training workshops to manage the tool."

A&W is looking at another SaaS-based application deployment this year, Williams said.

"I think you'll see more CIOs start to look at these types of solutions, whether it's hosted or they license the software and host it themselves," he added. "Why create your own when there's good things out there? I don't think you'll see as many people looking at Google application and spreadsheets [across a midmarket IT infrastructure]. There's some concerns about my data being somewhere else when it's critical to the organization. When it's a real robust application and their business is security, more CIOs will start to look at it. Many CIOs are under pressure to manage, control or reduce costs."