When picturing the relationship between the enterprise and the Software-as-a-Service (SaaS) business model, I imagine an evolutionary process that can be divided into three main stages. The first let’s call ‘The Comfort Zone’; the second ‘The Enlightenment’; and the final stage ‘The Re-Assessment’. Once we examine these we can then decide upon the right course of action when choosing how to adapt to the IT demands of the enterprise.

The Comfort Zone

First let’s look at the enterprise company. Typically it may be a bit strapped for resources and possibly even struggling to find the staff to assign to some of their most mission-critical IT projects in one of their departments.

And then there’s the SaaS business model – now a major trend among enterprise corporations. Most major SaaS players, such as Salesforce.com provide some form of web-based application functionality. Also known as on-demand, these guys charge their customers on a per-use subscription basis. And it’s a particularly attractive and efficient alternative to on-premises applications because it reduces the significant risks and costs of CRM implementation (and we’re all aware of the success rates of most CRM projects).

The major advantage of SaaS is that it can exist within the enterprise – similar to an ICBM missile silo within a military network – where the silo remains completely self-contained. The great thing about SaaS, from the enterprise’s perspective, is that it allows the business people to operate independently from IT, typically requiring only minimal input from them. It also makes life much easier for the CFO – allowing finance to make on-going payments rather than have to allocate and then justify a full-blown investment.

So SaaS really offers a ‘comfort zone’ solution for both the business and IT departments. SaaS offers the department’s user group a fully-functioning solution in quick time, while freeing IT from the worry and cost of having to implement a large on-premises IT project, or build the application in-house. A typical example of such a success is Salesforce.com, where a rapidly implemented sales force automation solution makes for happy sales staff and company executives alike. A win-win solution for all involved – for the time being. This leads us on to our next stage, ‘The Enlightenment’.

The Enlightenment

One of the great barriers to maximizing the full value of SaaS comes from the very reason the enterprise adopted it in the first place. The ‘silo’ effect means that the on-demand application remains effectively disconnected from the other applications that run in the enterprise, with the result that its information remains compartmentalized.

In the case of on-demand CRM solutions, SaaS software running solo can be viewed as a set-back to the process-driven enterprise, working in opposition to the goals of architects and business process analysts. And as a result, the enterprise, while happy with the fact that their mission-critical tasks are being performed, now begins to grumble.

Add to this the following issues and a re-assessment become almost inevitable:

1. The lack of automation that comes from being disconnected from the enterprise’s in-house applications means more data duplication, more manual entry and more human errors. You can’t even imagine how much enterprises are spending on these problems today!
2. As the on-demand application acquires increasing quantities and quality of information, other departments will want to buy-in and enrich their own applications with this data.
3. With the on-demand application becoming further enriched, your CIO will eventually want to apply some ownership to the system for security’s sake. Whereas in ‘The Comfort Zone’ it was more convenient not to own the system, now the situation becomes reversed.
4. And: With continued growth of subscribers to your on-demand application, eventually the enterprise will want to re-evaluate the license cost structure and subscription fees.

The Re-assessment of SaaS applications

Our enterprise now knows both the benefits and drawbacks of SaaS applications. Essentially the enterprise now needs to transform their SaaS application from a department-level tactical system to an enterprise-level solution to eliminate the duplicated work and manual processes, and to find a way of milking more value from their application and creating a more favorable cost-structure for the long-term.

The enterprise is essentially faced with two choices:

• Find an alternative solution to their on-demand application. This would normally mean going back to square one, with an on-premises solution or home-grown application, and losing all the appealing benefits of SaaS. This is a definite no-go.

Or:

• Somehow, bring their on-demand application more into the enterprise and integrate it with their existing applications.

The Value of Integration

I do believe that integration is really where the greatest value lies. Integration ties your on-demand solutions into your existing business infrastructure and enables both your on-premises and on-demand applications to work together in a way that gives them significantly more power and scope.

With integration, companies can multiply the power and reach of their Salesforce.com, SAP, Oracle JD Edwards, Movex, and other applications, allowing the enterprise to efficiently and automatically share and update information company wide.

Comprehensive information sharing gives both employees and management a fuller and more accurate picture of their overall business. Such a view allows management to make better business decisions, be more responsive to the customer’s needs, and get more efficiency and return out of their business transactions.

Integration Infrastructure vs. Custom Code

A word about custom code. The advantages of integration infrastructure over custom code integration solutions are clear. Custom coding is inherently more risky since it’s a one-off that hasn’t been tested in multiple scenarios. It’s also man-dependent: If you loose your coder after a year on the job, your project may be lost. While custom coding can seem an attractive alternative for some integration projects, the process is also time-consuming and inflexible when changes to the original architecture are needed. Few enterprises have the luxury to wait for their custom-code project while the market continues to evolve and move on. And when changes are required to your business process, or new applications must be added, many of the existing coding threads become redundant and need to be re-written.

Conclusion

So while I recognize that “integration” is a word that may scare many SaaS users and IT staff, the benefits far outweigh the potential fears.

Like in any industry, there will always be vendors out there willing to promise you integration at the push of a button, and who make it appear far simpler than it may be in reality.

The important thing is to choose a vendor that has the project experience to bring to the table a productive tool-set and powerful technology stack that can handle any integration scenario – whether straight-forward or more complex. Remember – the last thing you want or need is to start introducing custom coders and extensive consultancy that will push off your ROI and make you wonder why you didn’t stick with the more expensive and time-consuming on-premises solution. Integration remains by far the more cost-effective and practical solution for the enterprise. And when undertaken correctly, will bring your enterprise – SaaS relationship to the next level. Just make sure to integrate with a partner or vendor who really knows how to deliver on their promises!

About the author: A Swiss based Board-level professional, Avigdor Luttinger helps technology providers achieve their business objectives by leveraging their core competencies and the market opportunities; he is one of the founders of Magic Software Enterprises, and continues to dedicate a significant amount of his time to the company, where he functions as Vice President of Corporate Strategy. With over 25 years of experience and recognized expertise in the software industry, Luttinger is a frequent speaker and contributor at industry conferences and publications, and is also Executive Consultant at APL Technologies & Management Ltd. Luttinger currently covers Cloud Computing, Mashup technology, High Performance Workplace, Application Platforms, BPM and Integration. He holds an MBA from INSEAD in France and M.S. in computer sciences from the University of Lyon.

View Avigdor’s short bio

If you can’t explain why customers should do business with you, how can you expect THEM to know

Listen and look closely at advertisements that promote that they are the BEST – HIGHEST RANKED – MOST AWARDED – at something and it always come with the key qualifier. Best “in class,” and most awarded  “in their segment…”

THIS is the very key! Eliminate every opportunity to be measured on a level playing field with everyone else in your markets. Unless, of course, you are already the market leader with a substantial share…but I suspect, to achieve this, the market had to recognize uniqueness and a “bar” was raised with which to measure all others.

Create and play on a field that you know you dominate and force others to compete with you on your terms. One example from my past. Where IBM, NCR, Dell and HP were the recognized leaders in Point of Sale computers, a relatively unknown brand struggled to even be invited to bid. All of the others have nationwide and worldwide onsite repair capabilities with 8 hour response time offered. Too small to credibly compete, we redesigned a point of sale system that was the first and only blade based self service POS that was “purpose built” for POS with technical features (liquid cooled; flash boot; single module replacement from front of POS). The new challenge was a discussion around uptime, availability and purpose built design…something the bigger brand names struggled to adequately address for those who valued these aspects most. The company began winning contracts and industry awards and global recognition for innovation. You want to win more? Change the game!

It doesn’t always mean you have to revamp your entire product offer. Much can be accomplished by better targeting your offer to a segment that values most what you have to offer – where others don’t shine as bright due to their huge size; slow responsiveness; higher costs; or merely they don’t value this segment as highly. Example? EVERYONE wants to biggest utility companies in the Country – Duke Power and/or PG&E for example. To compete head to head against the largest industry vendors can be both expensive and time consuming. Select the target who needs most what you readily have and can do better than the bigger competitors – say CoOp and Municipalities … and strive to be the BEST… for this segment… and you may well enjoy more sales… shorter sales cycles… domino referral sales… greater brand awareness… more profitable deals…a broader customer base making you less vulnerable to fickle customers who change vendors every contract cycle.

So, how do we know which game to play? Everyone could use some help framing the following. You and your team are closer to your business than almost anyone. Your individual and collective perspective would be collected from all sources. Making an extraordinary effort to have these questions answered by a wide collection of sources is strongly advised. Feedback and input from customers; suppliers; sales partners; industry influencers and – ever more important – customers you are losing or have lost. Their perception is their reality – no matter what you say.

1. What do we do? “One sentence”  a. “We make the best value priced metal soft drink can in the Americas.”

2. What do we do uniquely or better than anyone else? (“We are the only one who…”) – a para max and try not to make it a catch all…like, “ we are the easiest to work with, best priced…flexible…custom tailored… mass production…green (recycled)… lightest weight…most durable… stylish…”

3. What Specific Segments Do We Provide a Specialized Offer? Avoid “every customer with a pulse” mentality. Consider lifetime profitable customer profile. Rank and prioritize your segments.

4. What is our Value Proposition to 1) Financial Services (specifically subsegment Client Account Records); 2) HealthCare (specifically subsegment EMR); 3) Telecommunications/Utilities (specifically subsegment Subscriber Records)

5. Identify, Validate and Document (from the target’s perspective) THEIR Value Metrics (I need to manage costs down and I need an cost effective tool to help me); Buying Criteria ( I don’t want to have to change everything I do to use that vendor’s product – the product should suit me and not force me to conform to it); Easy to Position the Benefits to my Stakeholders; …

Position the Problem Statement – then – Position the Value Proposition –– For example, as a customer, I struggle to integrate and make seamless disparate point products that actually create exposures. Where do other approaches fall short – what makes us the better way to go… – one page.

Why YOU? 2-4 page – brief non technical business case positioning paper to highlight the challenges; demonstrate how well you know their pain points and exposures; why the current and/or typical approach is insufficient; position against the competition (highlight the current and typical shortfalls for example – classic security rarely precludes the extraction of digital files on a USB or download from a USB); demonstrate how your offer came to be…the considerations…what was rejected…the rationale that drove the development of your offer…in terms that keep the customer pain point front and center.

About the Author: Orlando Joseph

Global Technology Executive with strong business and financial acumen. Strong ability to link marketing strategy and results directly to overall business strategy and company financial goals. Keen abilities to develop strategy from in-depth analysis of buyer and/or customer insights. Documented program development skills, from advertising to digital presence accros all relevant marketing channels. Possesses excellent influencing skills and able to drive consensus. Able to recognize and articulate a future direction; provide strategic direction, and have the ability to direct global and localized products, brand, advertising and related specialties while managing budgets. A strong track record of new product development and demonstrated ability to forge strategic alliances with key partners. Accustomed to driving results and delivering return on Investment. View Orlando’s short bio

In the day of the simple country store, business intelligence was comprised of knowing what was “in stock,” what was “out of stock,” what it cost to replenish and how much turnover was in a given period. Today, retailers capture how long a product is on a specific shelf and does it sell better here or there – in which season and at what price and it was sold to whom.

Every competitive business recognizes the power in knowledge. The definition of “knowledge” is both subjective and obscure. All too often, a business is unable to succinctly express what information it wants and what it will do with this information. Many earnest efforts are made to develop effective data reporting resources. The most common mistakes are costly, time consuming and wasteful.

Taking the path less traveled can seem daunting and treacherous – when it comes to business intelligence, it can often be the right one

Because different companies have various needs and goals, a business intelligence system will differ from one company to another. Classic business intelligence is merely a reporting tool for historical performance. Effective analytics and data mining can establish a series of “knowns” and expectations from a series of influencing data points to provide a trending forecast that can lend a few potential outcomes with which managers can make decisions. Much like how a meteorologist relies on readings of barometric pressure; wind speed and direction at different altitudes in conjunction with high and low pressure areas, next week’s weather can be predicted better than relying on whether someone’s arthritic knee is throbbing in pain.

It is common to build reports comprised of disparate data points from functional islands reported separately and conclusions are drawn manually. Without a predefined plan, business intelligence can cause managers to react and the overall enterprise can appear rudderless. Managers struggle with the truth but business intelligence isn’t intended to be there to endorse the business’s decisions or validate a specific strategy but to provide sensitivity to how things are progressing against goals and targets– and provide alerts if the targets and goals are slipping away – and most importantly, provide insights into which dials to turn that will get everything back on track.

The most common tool managers rely on as business intelligence resources are simple Excel spreadsheets. As a platform for business intelligence, Excel spreadsheets are inherently flawed. The manual entry nature of most Excel spreadsheets simply means that, on average 7-11% of the data in a spreadsheet is an error. In addition, as exposed by most Sarbanes Oxley audits and security penetration tests, spreadsheets rarely have adequate security, protection and process compliance to ensure the integrity of the data. For example, sales people who aren’t likely to make their sales figure for a period are readily there to change data points that reset their expected sales but the changes are rarely reflected in all relevant data.

Additionally, spreadsheets are portable. This means that there will be numerous versions and even more copies of versions floating around inside and outside of an organization. Those on laptops, tablets and flash drives are the most commonly found to wind up in the wrong hands.

The fact is, it isn’t about the data but it is in planning for how to use the data to create knowledge an organization can act on. For many organizations developing business intelligence, they work to define what data they want, but this is only a small first step – not the end. Assessing, first, how an organization will act with what information is the first real step in assessing the genuine use of business intelligence. Figuratively, as if you are planning a trip, establish your destination objective and plot the most desirable route to your current location. Next, establish an honest gap analysis and assessment of the resources, effort and commitment required to move from where the organization is to where it needs to be. This is a very critical step since a swimmer doesn’t set their destination goal to be half way across a lake.

Establish how decisions are made before deciding what data you want and when

Decisions are, typically, a result of cascading inputs. Analytical systems see this as “if this– then.” Experienced managers use a great deal of information to make decisions. Not all the information is in the same place, in the same applications, in the same form or even in the same functional departments. Inherently, experienced managers gather data points from here and there and the outcome helps guide their actions. Effective business intelligence delivers the collective “reasoning” derived from the existing data points to empower managers to make the best decisions based on all the relevant information available.

Be sensitive to certain realities. In developing effective business intelligence resources, remember that 60% to 80% of the real end users are going to be non-technical. In addition, recognize that what is available is too much for too few. To serve the needs in a separate and compartment alized way will hamper the ability for the organization to operate with a genuine real time dashboard. The components should seam lessly aggregate to a collective overview as easily as it would be to take a snapshot of relevant information in a defined smaller “ecosystem.” While it seems obvious, too few business intelligence systems create a picture that easily delivers the sum of its parts as a refined presentation of results.

Process “Best Practices” call for defined and communicated workflows – complete with interdependencies and relationships exposed. Best practices in business intelligence require the same discipline be applied to the flow, importance and dependency on data throughout the enterprise. A great of data will be discovered to be historically relevant but serve little purpose in overall strategic decision making. Users likely defined the need by stating how that data point has always been a metric watched but few can say why it is relevant any longer.

A business intelligence system can therefore be customized to answer the particular needs of a particular company. The tools and necessary resources can be designed in such a way that it features the company’s unique performance indicators and measurements. This way the business intelligence system will help determine if the company’s strategies and plans are compatible with their goals. This is an important part of the assessment process because it is at this stage that the company’s current status and position is analyzed to determine how it is going to fare in the next few years to come.

To ascertain if your organization is ready for business intelligence, explore how your situation stacks up.

Senior Executive Commitment

• Sponsorship to drive the establishment and reliance on a solid business intelligence strategy is more important that the requirements, design and development stages. Is it being woven into the culture? Are groups likely to feign support? – submit requirements but maintain their own particular reporting tools outside the business intelligence infrastructure?

Well defined short and long term goals

• Is the organization ready to do a genuine assessment on setting, documenting, communicating and steering based on short and long term goals? Are all oars in the water pulling in the same direction and cadence?
• Establish key performance indicators KPIs – as mile markers toward 3-5 year enterprise The foundation of a successful Business Intelligence Competency Center is critical.
• The driving inspiration behind a BICC is (and should remain) a service It isn’t about the IT department– developing and maintaining an application.

Service orientation – for example – good ones implement a classic help desk tracking system to ensure users receive the highest level of support

• Keep as a mantra – Be an adaptive, responsive and proactive resource.
• BICC metrics established in the planning phases – keep an eye on the target.
• Experienced staff with the service mentality to support the functional areas.
• Measured benefits linked to the incentives for a service oriented organization.
• Manage the content to relate to the end user needs.
• Continuous training– for BICC staff and users– with a focus on continuous improvement.

From a technical aspect, Business Intelligence benefits can be derived from the following approaches

• Use of Data Marts that automatically   propagate spreadsheets   in a central work space.
• Locating historical data – collection tools – actions expected- migration of data to a single source for analytics.
• Knowing how to work from unstructured data to deliver a comprehensive executive performance dashboard.
• From the start, establish a regular and natural approach to data cleansing and processes to ensure integrity, security and optimization…as a continuous effort instead of on a project basis.

Start with solid vendor management policies – don’t let vendors drive the strategy and outcome

• Data integration, reports, analytics and performance management tools – being able to buy as modules – when ready.
• Training – feedback loops – development resources for special needs adhoc access

A good business intelligence platform must have:

• Traceability – transparency – meta data integration – compliance with governance and regulatory requirements.
• Ease of adoption by functional areas- relevant– ready to use logical and physical data models, data integration processes, analytical models and a series of cascading standard reports.
• Benchmarks – industry performance –competitor intelligence – market research.
• Solid business intelligence reporting will deliver more than ROI, customer churn, costs of goods sold or other classic metrics, real business intelligence can help to show what combination of offers or promotions have the most impact on aggregate gross margin For example, which bundle of services at what price points deliver the highest profitable ARPU from which segment of mobile customers?

Business Intelligence is not immune to what haunts most other major enterprise initiatives

An organization gets out of Business Intelligence what is willing to put into it. Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) are just two classic initiatives that experience a 60% to 70% failure rate to complete and/or fully implement. Many senior executives have disparaging things to say about what they got against what they expected and, in almost every instance, it is easy to find where the commitment waned and the effort simply became too difficult to do well.

To relate the effort to how we think:

Business intelligence is less like a diet and more like a commitment to a complete change in lifestyle. Are you really ready?

About the author: Joe Orlando

Global Technology Executive with strong business and financial acumen. Strong ability to link marketing strategy and results directly to overall business strategy and company financial goals. Keen abilities to develop strategy from in-depth analysis of buyer and/or customer insights. Documented program development skills, from advertising to digital presence across all relevant marketing channels. Possesses excellent influencing skills and able to drive consensus. Able to recognize and articulate a future direction; provide strategic direction, and have the ability to direct global and localized products, brand, advertising and related specialties while managing budgets. A strong track record of new product development and demonstrated ability to forge strategic alliances with key partners. Accustomed to driving results and delivering return on investment. View Joe’s short bio