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Technology Leaders Talk: Is Software-as-a-Service Really the “Next Big Thing”?

Software-as-a-service is growing fast, projected to reach more than $10 billion by 2009. The idea is simple-rather than buying, implementing, upgrading and maintaining software in-house, companies can buy access to solutions that are developed, housed and maintained by third-parties. Users gain access to the latest version of the software, have the ability to customize it to some degree and pay only for what they need. This model makes it possible for CIOs to buy an entire solution-such as HR or recruiting-and deliver it to internal users.

Sound too good to be true? We turned to three of our technology leaders- Don Rippert, chief technology officer; Bob Suh, managing director, growth and strategy; and Frank Modruson, chief information officer, to hear their perspectives on how this type of service will re-shape the future of IT (or not).

Don Rippert, chief technology officer

I think that software-as-a-service will have a big impact on smaller companies or subsidiaries of larger companies because it can be implemented easily and is priced per user per month. However, for the Global 2000, while I think it will be an important part of their overall suite of tools, I don’t think it will be singularly transformational. Why? Because the inherent benefits-easy to install, flexible pricing, minimal maintenance-may be outweighed by the cost and complexity of integrating a solution into the rest of an enterprise’s systems. But that’s not to say that the Global 2000 will not embrace software-as-a-service at all. One interesting aspect to this is that because a lot of the software-as-a-service was developed from the ground up, they are in fact the best example of how to do service oriented architectures (SOA (http://www.accenture.com/Global/Technology/Service_oriented_Architecture/)) today. In many respects, software-as-a-service has really pushed the envelope on SOA – solving the technical issues and proving the benefits of SOA development.

Frank Modruson, chief information officer

From Accenture’s perspective, I think software-as-a-service works best for areas of the business that can be fairly contained. Things like payroll, where a service provider can be keeping up with tax code for all its customers and work enhancements into the software, or areas like recruiting, which is a process unto itself from the first contact with a candidate until they accept an offer. Even with enterprise systems, I think we’re still looking at discrete pieces or functions-like logistics planning that you can get in there fast. As a CIO, the benefit I see is that it lets me balance my team’s capacity to do new things with my need to fulfill ongoing demand. In other words, we don’t have to divert resources to focus on an upgrade or an implementation if we’re relying on someone else to maintain the software. The trade-off is flexibility, but I’m not sure that’s a bad thing. Forcing a more standardized approach can lower costs and streamline people’s ability to work across different areas. Overall, in areas of the business that are easily contained, I see software-as-a-service as delivering better functionality, better capability and a better ability to get things done.

Bob Suh, managing director, growth and strategy

I see software-as-a-service as a major trend emerging over the next five to seven years. Remember how being able to buy a cooked, seasoned chicken in the supermarket transformed the prepared food industry? That’s the type of potential that software-as-a-service offers. Today, I think that some CIOs may be underestimating the potential. My sense is that most CIOs are talking about this for very specific areas such as HR or marketing-which will very likely be the entry point for the Global 2000. Part of this trend will be driven by staffing constraints; software upgrades place an enormous burden on IT organizations. SaaS offers an attractive option to upgrading an entire system. The cost of integration, people time, trainin (not to mention buying licenses and paying maintenance) will be significantly reduced. I know that our clients are going to start demanding it as an option, so it’s more than viable, it’s quite compelling.