While most of the opposition to the SaaS model has come from traditional on-premises vendors, it is also true that there remains a healthy degree of scepticism among the end users.

“I do wonder whether SaaS is just a progression of what we have always had,” says Stan Smith, head of information services at the Institute of Education. “At some point all our systems are bespoke and handcrafted. We maybe hang on to some bespoke stuff because we think ‘they are so different and we need to have this special thing’.

“We think we got all this control and flexibility because we’ve got this inhouse development, but it is questionable as to whether we really have that,” he says. “Assuming you go live with a core set of commonality, you can use and tailor the rest yourselves, I think the issue now is do you host that or does somebody else do it and how can you develop that over the time?” adds Smith.

Smith says his concerns about SaaS include cost, adaptability and people’s willingness to embrace change. Then it’s about are the current offerings there for CIOs to be able to adapt that. “At the moment SaaS is probably best for discrete areas, particularly if you are starting a fresh area of the business or a new business.

“I would say why wouldn’t you look at SaaS but it’s a move from where we are now to somewhere else entirely and it is quite a challenge to convince people just to do it. I think probably we would look at it but start with a standard package and bring it, very carefully, on from there.”

For others the security ramifications of SaaS remain daunting. The argument against the ASP model in the 1990s was ‘would you trust your data to Larry Ellison?’; now it is a case of ‘would you trust your data to Salesforce.com/NetSuite/delete as applicable?’ Advocates of SaaS argue that security levels can be higher and better managed by an expert third-party. But, for some firms, the business sector in which they operate is simply too sensitive for that. Then there is the issue of downtime. SaaS users are dependent on the servers in the SaaS provider’s datacentre staying up and running. They go down; the business goes down. Salesforce.com suffered a hugely embarrassing outage the Christmas before last, which knocked out retailers in the crucial busy period before the holidays.

“That’s a major issue for us,” says Steve Chambers, CIO of Visa Europe. “If the servers go down, then we stop selling. It is really important for us, vital in fact, that the systems are up and running.” Chambers feels CIOs need to ask themselves some hard questions. “For example, are you in control of the value of your business? Can you respond to it? What does the business need you for? You are there basically to make it productive. You are making the business able to be productive,” he says.

Taking precautions

SaaS still requires front-end work. Despite cost and operational benefits, SaaS software still must satisfy its end users. “As with any tool, adoption is the key to success,” says Anthony King, CIO, Ventana Medical Systems

Consider the state of your own data. How much work will be required to feed it to the SaaS application neatly?

Do not get optimistic on time frame. SaaS has a reputation for rapid deployment, but perhaps not as rapid as you may think. Set a realistic schedule.

Examine your business processes. Some SaaS applications are difficult to customise, so make sure your business processes match the software’s design. “It’s a good opportunity to simplify the processes and to make your business more efficient,” says Fabrice Cancre, COO, OlympusNDT.

“If systems collapse and you can’t respond, if you can’t put the tools in the salesmen’s hands to help them bring in business, then you, the CIO, are in trouble. That is how I am looking at SaaS from the top level. Is it a tool to benefit the business? It’s not just the features and functions. What are the characteristics that are going to drive the business value? If the characteristics best match this as an option then that’s the way you go.”

There are also those who have stuck their corporate toes in the water and to date not enjoyed the success they expected. Standard & Poors has found that its SaaS system from Salesforce.com has been essentially rejected by its target user community. Even allowing for the fact that no salesperson wants to use any shared system other than their own filofax, this is an awkward state of affairs – ease of user adoption is another proclaimed selling point for SaaS.

“They don’t like it. They say this isn’t usable and can we change it?” admits Jora Gill, vice-president for international business systems at Standard & Poors. “We say no, then we’re asked why we have an IT department if we can’t do anything about it, what’s happened to our power?”

But interestingly, Gill reckons that there are certain constituencies within his organisation that would appreciate the system. “I think the dashboard is great and my board of directors would love it in theory but you have to integrate with many other systems to get an effective dashboard,’” he says. “The approach we’ve taken is to use Salesforce.com to link all our sales data but we have also created a portal, because we didn’t want to put the transactional data in Salesforce.com because we didn’t want to give that data out. They love it now, this portal this is exactly what we need.” Gill admits that there is a degree of trepidation at being dependent on a third-party provider.

"They don’t like it. They say this isn’t usable and can we change it?"

Jora Gill, vice-president for international business systems, Standard & Poors

“There is a danger in giving away more and more knowledge,” he says. “IT directors want to keep the power and in supplier relationships I think there is a risk, a point where Salesforce.com is so big it will be calling the shots. It is about seven years old and look at the size of it already. In 10 or 15 years, it could be another Microsoft and in a position to dictate their terms. Gill remains inclined towards SaaS, but is hugely sceptical of how to sell it across his organisation.

“I didn’t start with a greenfield site and it is going to be painful. It’s going to be a roller coaster,” he says. “It will costs us a lot of money. I don’t think I will be walking into the boardroom risking my reputation on SaaS, saying you either you back me or I walk. It is not on my top 10 agenda of things that I will be pushing the board to do at this stage. “We are a finance company, we are not a development company. Once we have seen a few others in our sector do it on a big scale, then we say ‘okay, it’s mature enough’. But we won’t take risks, so I think we will park it for a couple of years and see what the other guys do, see if some of the other banks start buying into it. Once we have seen a few more enterprise success stories then we will start looking into that kind of investment.”