I've been working now with a number of SaaS applications (Salesforce.com for one) and have to say I find them very affordable and practical. My company also markets some applications that we can provide as licensed applications or hosted applications or as SaaS applications. While the allure of the SaaS model is strong, there are a number of barriers to adoption at the enterprise level for SaaS that must be overcome before more enterprise systems will become a service.
The first issue and the one that is being overcome fairly rapidly is data secrecy. Most firms want to know if you can segregate and secure their data from the information and data of other firms that are also hosted in your instance. I think this was an issue at one time and is still a concern, but most organizations have demonstrated their ability to address this issue.
The second issue is stability and scalability. The information technology teams want to know if your SaaS model is stable and scalable. Where does the data reside? Can the infrastructure and source code scale? How long have you been in business? What limitation exist to your stability and scalability. Of course, many of these same barriers exist within a corporate IT organization, so they are used to asking these questions. Just getting new hardware installed in most corporate IT environments is a difficult chore fraught with paperwork and procedures. The stability and scalability issue is of course a real one if the SaaS organization is small. However, most firms are overcoming this by partnering with larger hosting organizations or my moving into the "cloud". The computing cloud - whether Amazon's or Google's or another provider, will provide almost infinite scalability for any software application.
Another barrier to SaaS, especially at the enterprise level, is user management. Most business users want their applications to be available to a broad array of users, but they don't want to consider user management. As a SaaS provider, I cannot describe the number of times that we discuss the availability of users and how we'll populate the user master in our applications. The simple approach would be to link to a firm's LDAP or Active Directory list, if it is clean and it exists. There are a number of concerns from a security perspective about a hosted application linking to a corporate Active Directory list, clearly, but without such a link user management becomes difficult if more than a few hundred employees are active in the SaaS application. This becomes especially true when considering terminations. Many corporate IT organizations have strict rules about how quickly a person must be terminated in a system when they leave an organization, and it is not easy or simple to manage this process with most SaaS applications.
While business teams view SaaS applications as a way to speed up the deployment of software they need and work around their IT staff, or acquire new tools quickly, they rarely consider the user management aspect of the application, since most internally developed and managed applications link to a central user repository or have been through the effort of assigning users. Creating an easy, safe way to constantly confirm that a user belongs in the system and is an active user as far as the corporation is concerned will go a long way to encouraging broader adoption of Saas across the enterprise.
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