© 2010 forrester research, inc. reproduction … © 2010 forrester research, inc. reproduction...
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© 2010 Forrester Research, Inc. Reproduction Prohibited1
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To SaaS or Not?What Is The Right IT Service Management Model For Your Organization?
Evelyn Oehrlich Senior AnalystForrester Research
October 19, 2010
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Weigh your options to support service
management preparations for the
upturn.
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Agenda
� IT budget outlook
� IT operations challenges
� IT fears
� IT goals and initiatives
� Alternative business models for IT
– SaaS maturity model
– Differences
– Decision model
� Summary/conclusion
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A year ago, things began to look uniquely black
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Business leaders put emphasis again on growth while CIOs still focus on efficiencies and cost
Base: 2,803 IT budget decision-makers
Source: Global IT Budgets, Priorities, And Emerging Technology Tracking Survey, Q2 2010
* 5 on a scale of 1 (not on our agenda) to 5 (critical priority)
“What are your firm's three most important corporate business priorities over the next
12 months?”
“Which of the following initiatives are your IT organization's top IT management priorities over the next 12 months?”*
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Adoption
Justifications
Customer satisfaction
Service delivery
Service consumption
New technologies
Business demands
IT Operation groups face challenges
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Normal IT tradeoffs have been skewed to short term priorities
Short Term Long Term
Most savings today Overall total value
Take-orders vendor Value-added supplier
Run what exists today Build for the future
Cost-plus transparency Outcome-based visibility
Financial
Relational
Architectural
Contractual
Recession has pushed many firms’emphasis way over to the short term
agenda
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IT fears
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The economic tide is hesitantly turning
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Goals and initiatives
Source: February 12, 2010, “The State Of Enterprise Software And Emerging Trends: 2010” Forrester report
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MOOSE and IT spending by verticals
Source: Enterprise And SMB Software Survey, North America And Europe, Q4 2008
Maintain and operate the IT organization, systems, and equipment
© 2010 Forrester Research, Inc. Reproduction Prohibited13Source: Enterprise IT Services Survey, North America And Europe, Q2 2009
IT’s recession responses shift in 2009 — NA
© 2010 Forrester Research, Inc. Reproduction Prohibited14Source: Enterprise IT Services Survey, North America And Europe, Q2 2009
IT’s recession responses shift in 2009 — EMEA
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IT should consider alternative business models
to reduce the MOOSE.
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Cloud computing
Source: February 12, 2010, “The State Of Enterprise Software And Emerging Trends: 2010” Forrester report
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SaaS adoption by applications
Source: May 19, 2010, “SaaS Adoption 2010: Buyers See More Options But Must Balance TCO, Security,
And Integration” Forrester report
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The leading benefits of SaaS are lower costs, faster deployment, and less IT staff
Source: May 19, 2010, “SaaS Adoption 2010: Buyers See More Options But Must Balance TCO, Security,
And Integration” Forrester report
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SaaS markets
Self Hosted
BusinessApplication
ITMS
Outsourcing
LegacyApplication
ITMS
ASP
PackagedApplication
ITMS
SaaSApplications
SaaS Applications(CRM, HR, ERP)
ITMS as a Service
% moves to SaaS
% moves to SaaS
% moves to SaaS
PaaSPlatforms
Enterprise Mash up
of Legacy/Packaged/SaaS
Apps with business logic by
ISVs attracted via install base
ITMS
Enterprise Mash Up
Disruptive Replacement
outsourced
replaced
% moves to SaaS
Ven
do
r E
vo
luti
on
Vendor Evolution
PaaSInfrastructure
PaaS Infrastructure
Technology Stack
License
ProvidePlatform
Technology
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Forrester’s SaaS Maturity Model
Source: August 14, 2008 “Forrester’s SaaS Maturity Model” Forrester report
SaaS
maturity level
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SaaS versus Application Service Provisioning versusApplication Outsourcing
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SaaS versus ASP versus AO
Architecture SaaS ASP AO
Originally designed to be
SaaS
Yes No –
client/server
architecture with added
web GUI
No –
client/server
architecture with added
web GUI
End-to-end responsibility
(hw, sw, security, dr …)
Yes Yes Yes
Deployment
Demo Immediate
demo available
Sometimes
needs to be set up
Sometimes
needs to be set-up
Production Immediate
production instance
Needs to be
set-up
Needs to be
set-up
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SaaS versus ASP versus AO (cont.)
Upgrade SaaS ASP AO
Who controls timing? Provider/Customer
Customer Customer
Payment model Subscription Subscription Upfront
license &
maintenance
fee
Customer owns license No No Yes
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SaaS versus ASP versus AO (cont.)
Application
management?
SaaS ASP AO
Who develops application? Provider Software provider (not
ASP)
Software provider (not
AO)
Who has responsibility for operating & maintenance
of application &
infrastructure
Provider ASP AO
Who owns HW Provider ASP AO*sometimes customer
PO’s
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SaaS TechRadar™
Source: March 12, 2009, “TechRadar™ For Sourcing & Vendor Management Professionals: Software-As-A-
Service” Forrester report
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Forecast: IT management SaaS market, 2008 to 2013
Source: November 17, 2008, “How Big Is SaaS In IT Management Software?” Forrester report
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Forecast: IT management SaaS market, 2008 to 2013 (cont.)
Source: November 17, 2008, “How Big Is SaaS In IT Management Software?” Forrester report
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SaaS buyers cite value add in times of recession
� Reduce upfront costs . . .
– . . . and have more predictable costs over time.
� Prove value before committing . . .
– . . . and continue to demand value from your vendor.
� Ability to scale — up or down
� Offload risk to the SaaS vendor
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But decision-makers voice concerns with adopting SaaS
Source: February 20, 2009, “Software-As-A-Service Adoption Expands” Forrester report
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A new dawn perhaps? But what does it take
to achieve it?
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� Financial analysis
- third party process consulting
- licenses cost vs. subscription cost (implementation, integration, training)
- administration, maintenance and upgrades
- support, administration, user management
� Capital efficiency
- increased output per capital investment
- direct cost avoidance
� Protection of assets
- cost avoidance
A “more science than art” decision model
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A “more science than art” decision model (cont.)
� Business Impact
- Need uptime guarantee (depending on vertical)
- Penalties for missed SLA’s
- Compliance
- Mandate
� User Productivity
- Immediately
- Reduction of staff
� Risk
- Implementation risk
- Impact risk
- Strategic risk
- Measurement risk
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� Skill and process analysis
- Process maturity
- Size and skill of team/members
� Technical requirements
- Integrations needed
- Depth and breadth of solution
- Fill in the blank
- Support needs
- Maintenance needs
A “more science than art” decision model (cont.)
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� Contract terms and SLAs
- Uptime and performance
- Disaster recovery and business continuity
- Support assistance
� Vendor SaaS value
- Size and profitability of vendor
- Mix of SaaS and other business
A “more science than art” decision model (cont.)
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Your SaaS Checklist
� Budget, contract, SLA:
- Pay as you go model, pricing, SLA details
� Speed-to-delivery
- Implementation, deployment, ongoing changes
� Security and business continuity
- Some risks – evaluate the vendors DC
� Uptime and performance
- depends on your scope and size
� Vendor viability and trust
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Recommendations
� Implement a formal method of due diligence.
– Weigh cost, benefits, risk
� Be rigorous in the development of metrics for cost, benefits and risk.
� Pricing and contracts matter.
– Don’t forget SLAs, protection against heavy price increases at contract
termination, and support expectations.
� Vendors with an on-premise alternative mitigate risk.
– By providing option to move to perpetual license
– On-premise version typically provides greater flexibility and customization
capabilities
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Thank you. Danke. Merci. Gracie.
Evelyn Oehrlich
+1 617-613-8803
www.forrester.com
www.forrester.com