The world of Software as a Service (SaaS) was just a concept as we turned the corner from the dot.com debacle and there was lots of theory at that time. I remember a strategic meeting with some executives from IBM that were discussing a time when software would be a utility like electricity, water and the telephone. Fast forward to 2008 and now SaaS is all the rage in the marketplace. More specifically, the world of SaaS is undoubtedly looking to CRM as the poster child in terms of adoption, adaptability, and ultimately market share.

In the past seven years I have seen the evolution of these technologies and the impact on users and organizations. I have seen the implementation methodology evolve and the approach to the SaaS model attempt to adapt to harmonize with mainstream technologies most companies have deployed prior to the evolution of SaaS capabilities.

Recently I had more strategic conversations with executives from one of the major providers of business application software as they move forward with their first major venture into SaaS in the CRM space. They asked me after years in the marketplace and experience with most of the mainstream CRM technologies what my thoughts were regarding the SaaS approach to CRM. I decided to share them here because I believe they are relevant to almost every evaluation of CRM and buying cycles we see today.

The first concern that I expressed about SaaS is the methodology that many firms use when deciding to deploy this solution. Larger firms with business analysts and a firm knowledge base regarding thier operations tend to have the best opportunity for success. Unfortunately, many mid-size and smaller companies lean towards SaaS because of the lack of expertise and the speed of deployment.

In the past few years I have migrated a number of frustrated companies away from SaaS offerings that the feedback was universal. Most companies who have had limited success with deployment put little or no effort into the analysis and operational aspect of CRM. And, many of the companies that deployed SaaS also gave little consideration to their existing internal systems and interoperability.

One of the biggest assumptions with SaaS is the level of base line technology internal to many small and mid-size companies. The on demand approach assumes a certain level of processing power on desktops and significant connectivity. In most of the systems I have deployed as SaaS solutions there were ultimately investments to core internal technologies or connectivity in order to reach acceptable performance capabilities. These investments were contrary to the selection of the SaaS because of the desire to avoid this type of investment.

The second major concern I have seen evolve in the world of SaaS and CRM is the limitation of operational workflow and integration to in house systems. I have heard time and time again that customers quickly realize the value of CRM when deploying SaaS and then find that the operational efficiency is simply not there without providing enough valuable information to the user population. The problem lies in the expectations of the customers. If a solution is void of critical company data and the ability to transact with in house systems there will be gross inefficiency and a significant increase in operational challenges.

The final impact of SaaS that organizations should consider is the effect on the front line user. Decision makers need to understand that any CRM solution will impact heavily on the quality of life for people that rely on this solution to be productive. The positive side of SaaS is the high avialability of the technology wherever people need access. The downside is that most field personnel need access offline and available without direct connectivity. I have had interviews with teams of sales people that relay the need to extend their work day or change the way they operate in the field in order to have the ability to utilize SaaS CRM effectively.

At the end of the day SaaS providers have made great strides and we continue to see improvement in the solutions and the capabilities they offer. We will continue to see more improvements. In relation to CRM SaaS still has a way to go. As integration offerings improve and the extension of robust back end ERP SaaS solutions provide transactional capability and improved Business Intelligence (BI) we will see SaaS more as an every day utility. For now SaaS will have the highest impact as a point solution in the mid-market or as a strategic play for larger firms.