KMWorld 2023 Is Nov. 6-9 in Washington, DC. Register now for Super Early Bird Savings! 

SaaS in perspective

"The records management discussion has now reached the boardroom level," says Patterson, "and it’s also filtering down from the mid-market to a more pervasive presence throughout the enterprise." AXS-One maintains that the relative ease of launching a compliance initiative via its hosted service will lower the barrier to participation for firms that are not yet managing their records proactively.

Managing learning content

Royal Ahold is a $56 billion supermarket and food service company based in the Netherlands, with operations in the United States and Europe. As a large global company with more than 240,000 employees, its training needs are substantial, and in 2004, Royal Ahold selected Plateau as its learning management system (LMS) to deliver online training, as well as to manage student records for both online and classroom training. Recently Ahold signed up for the iContent
service, which was introduced by Plateau in October 2006. iContent provides services to integrate third-party and custom-developed content into the LMS, and then delivers it over a secure content distribution network.

Incorporating learning content into the LMS so that it performs to specifications is not necessarily a straightforward process. "The LMS needs to document appropriately whether the person has completed the course," says Renee Wallace, VP of training and organization development at Ahold. "The criteria vary, though—in some cases, completion means that the learners have looked at each page of the course, but in others, it means that they have obtained a specified score on a test."

Rapid results

The iContent service has been helpful to Ahold in meeting targets for training delivery. "In one operating company, we needed to deliver HIPAA training to 7,000 employees," notes Wallace, "and with Plateau we were able to complete the training within a month." Without the rapid integration and distribution allowed by the Plateau system, Ahold would have been challenged to meet that goal.

Plateau LMS pricing is based on the number of active learners, with one rate for corporate employees and a lower one for store employees. iContent pricing is based on integrating a set number of training programs in a given year, and storage on the content server is a flat fee based on anticipated storage requirements.

"Plateau worked with us to ensure they understood our needs," says Wallace. "And although Plateau assigns resources based on our estimates, we would be able to scale up if necessary."

The iContent service can manage content for organizations that are using a homegrown LMS or that of another company. "We are seeing a very high level of interest from potential customers for this service," says Jennifer Milder, director of iContent at Plateau.

"Managing content is an ongoing issue," she adds, "and many companies do not want to focus their efforts on this function, but prefer to dedicate themselves to the actual learning process."

Horizontal trend

A number of factors have changed since the ASPs made their first offerings 10 or more years ago. Many of the concerns about having data outside the organization have been addressed by advances in security and the experience of the vendor.
"For these vendors, security is a core competency, and, therefore, they are likely to be in a position to offer more robust security than many of their customers could." says Mary Laplante, VP of consulting services at Gilbane Group. "Moreover, a SaaS vendor that cannot offer solid security is simply not going to stay in business." Customers are expressing a much higher level of comfort with security now than they did when ASPs first began offering hosted services.

Among the early adopters of SaaS, Laplante says, are media and publishing, financial services and telecommunications. "A stronger trend, though, is horizontal—rapid acceptance in the marketing departments across many industries," Laplante explains. "These departments are quick to see the value of an application for managing their collateral and branding. They like having a dedicated service to support them, instead of relying on a sometimes overburdened IT department for implementation and support."

The advent of service-oriented architecture (SOA) will facilitate the move to SaaS, according to Saugatuck Technology, a strategic consulting firm focusing on IT market research. Saugatuck predicts that the growth rate of SaaS will be 25 percent per year through 2010.

"By 2012, we expect that 35 percent of all new business software will be deployed and delivered as SaaS," says Bill McNee, founder and CEO of Saugatuck. SOA will allow linking the SaaS applications to on-premise data and processes, making for a unified system with applications that can readily communicate with each other.

Alternative ECM options

Enterprise content management (ECM) and document management solutions are also offered through hosted and SaaS models. Some were established initially as SaaS products, while others were originally on-premise products for which a hosted product was developed. Open Text, for example, began offering a hosted solution for Livelink ECM, its content management and collaboration product, seven years ago through its Affinity partners. Now, customers can obtain a hosted version of Livelink ECM either through a partner or directly from Open Text.

"We are finding that a wide range of organizations, including large global companies in the energy, financial and medical industries are opting for a hosted model," reports Ryan McDonald, director of hosting at Open Text, "in addition to smaller companies that do not have the resources to support an enterprise solution."

Open Text takes a flexible approach to its hosting. "Although we do have a multitenant type arrangement that is typical of SaaS, with a group of customers sharing an environment," says McDonald, "we do this in a method that allows our customers to individualize or upgrade when required independently from other customers."

Open Text and most of its hosting partners handle patching and upgrades, and provide the infrastructure if a customer needs to scale up. Pricing is based on the number of users and storage requirements. Content is stored off site, although customers can keep backups locally.

One of the benefits of the hosted model is that the vendor is handling much of the risk associated with content management, according to McDonald. "We provide the customers with confidence about the security and integrity of their data," he says, "which are key concerns today."

The hosted service also has guaranteed service levels as part of the agreement. Open Text and most of its partners can handle the integration required for Livelink ECM to work with other products in use within an enterprise, a support service that McDonald says is much in demand.

Maintaining operational controls associated with compliance is a big job, and for many customers, offloading that task allows them to focus more effectively on their primary goals. For example, the hosting company would need to be able to produce a SAS 70 auditing report for compliance with Sarbanes Oxley Section 404, which relates to the processes used in an organization’s financial reporting.

"Producing the documentation is a large part of compliance," says McDonald, "and we can help right away with our expertise in that area."

Extending document management

Xythos entered the SaaS market earlier this year with its Xythos on Demand document management product. It offers the same functionality as the Xythos Enterprise Document Manager. As of April, the company reported that hundreds of organizations had subscribed to its new service. The SaaS option is proving attractive to organizations such as investment firms and law offices because of the reduced in-house requirements for IT infrastructure and support. Xythos says its customers have reacted positively to the ability to share documents securely with colleagues and clients. For organizations that may wish to switch from the SaaS service to an on-premise model or vice versa, Xythos offers easy migration options.

Data for users of Xythos on Demand is stored offsite, but the Xythos Drive software also allows creation of a mirror image of the Xythos files on the customer’s computer.

"One of the key benefits of content management delivered as a service is managed storage," says Jim Till, CMO at Xythos. "Xythos on Demand customers gain peace of mind knowing that all of their documents are stored offsite, backed up and protected by dedicated experts."

Nevertheless, users sometimes need to be able to copy files to their laptop, for example, and work offline. Xythos Drive synchronizes all the files that were changed in Xythos on a user’s laptop, so that revised files are automatically uploaded into the content management system when the user is back online.

SaaS from the start

SpringCM was created as a SaaS product, in which all users are accessing the same application that has been configured for their specific use. SaaS products are designed for organizations that want the benefits of a document management suite without having to purchase, install and maintain an enterprise product.

"SpringCM is a single platform that seamlessly integrates ECM functionality, with scanner and copier integration, OCR and zonal forms recognition, along with full search functionality and a formal taxonomy," says Dan Carmel, CEO of SpringCM. Content expiration dates associated with documents can be set up, with an e-mail alert sent to the content owner when the date approaches.

In addition to low cost and rapid deployment, one of the most significant advantages of SaaS products is the rate of software innovation that is feasible.

"We have a very rapid rate of product enhancement, in contrast to on-premise enterprise products that are updated only once every 12 to 18 months," says Carmel. "Because Spring CM is architected as a true multitenant SaaS application, only one platform needs to be updated. We can add product features every 10 to 12 weeks with no disruption to the user. In a traditional hosted model, upgrading is labor-intensive and expensive because many instances of the application must be upgraded, and often customizations have to be reapplied to each."

SpringCM is moving forward with a number of modifications that will be incorporated into its product as they become available. The current version of SpringCM has basic workflow for approval processes, but the next version will have a full business process management (BPM) engine. Viewing and markup capability for CAD files are also planned. A more extensive records management (RM) solution is on the SpringCM roadmap for next year.

"Knowledge management does not exist in a vacuum," emphasizes Carmel. "Organizations turn to it because they have a problem to solve. By combining document management, search, capture and business process management in a single platform, SpringCM tightly links knowledge management to business processes. SaaS is a very effective model for doing this."

Because the software is not installed at the user site, it is easy for a prospective customer to "turn on" SpringCM and try it out. The organization can then see if the SpringCM suite improves productivity, enhances customer satisfaction or addresses whatever need the organization has identified. That method of test-driving is more difficult to accomplish with non-SaaS products.

Oracle On Demand

In April, Oracle added Oracle Business Intelligence Applications On Demand to its group of products available as SaaS offerings. The application runs on the Oracle BI platform and is managed by Oracle staff. The BI solution augments Oracle’s Siebel CRM On Demand and PeopleSoft Enterprise on Demand and J.D. Edwards' products as SaaS products.

Late last year, Oracle reported that its On Demand products were being used by 1.7 million workers at 2,200 companies. Oracle also announced that its On Demand revenue grew by nearly 50 percent in the first quarter of 2007. The company has indicated that it plans to expand its portfolio of On Demand offerings to enable integration across its various solutions. Oracle does not distinguish, in its published figures, between customers who use a one-to-one hosted service and those on a multitenant SaaS model, however.

Interesting to watch will be the developments from NetSuite, which is majority owned by Oracle CEO Larry Ellison and which filed a registration statement on July 2 for its initial public offering (IPO). As a self-described SaaS pioneer, NetSuite offers ERP, CRM and BI, as well as an e-commerce component. Aggressively priced at $499 per month plus $99 per user per month, NetSuite gives small companies a chance to have considerable functionality without large investment and maintenance costs.

The future

All indications are that the SaaS market will be very robust over the next five years. Nearly every major business function is now being offered in this model. Gartner estimates that the worldwide market for SaaS was $6.3 billion in 2006, and that it will grow to $19.3 billion by the end of 2011.

Although the initial impetus for SaaS was partly driven by the needs of small business, organizations of all sizes see advantages in the model. "We have said for a long time that the truth about SaaS is that many big companies like this approach," says Ben Pring, research VP at Gartner. "In fact, although 80 percent of the users are small businesses, 80 percent of the value received by providers is derived from big companies."

The most intense activity to date, according to Pring, has been in CRM, HR and procurement. Compliance is also a significant and growing market. Traditional KM applications such as ECM, BPM and BI remain a small percent of the total SaaS market, but are expected to share in the rapid growth of this sector as time goes on.

KMWorld Covers
for qualified subscribers
Subscribe Now Current Issue Past Issues