Software as a service moves beyond the sales force

There’s no denying that SaaS (software as a service) and Salesforce.com have together reshaped the CRM segment of enterprise software. I’ve written about the pluses and minuses of SaaS before. This time I thought I would look at some other software categories where SaaS will have a major impact, including PLM (product lifecycle management) and project/portfolio management.

Free IT resource Open Source Business Conference (OSBC) May 22-23, 2007 Sponsored by OSBC Free IT resource Virtualization Insights from Top Experts - Learn how virtualization gets real! Sponsored by Dell

My biggest rap against SaaS has been that the multitenant nature of the SaaS architecture demands a great deal of standardization in business processes. It does not allow a company to significantly address processes specific to its industry segment. In other words, it does not easily allow for competitive differentiation through customization of business processes.

However, this very weakness can also be SaaS’s strength. In both project/portfolio management and in the many compliance issues now required in manufacturing, what are needed are standard best practices, not competitive differentiation.

Manufacturing regulations such as RoHS (Restriction of Hazardous Substances) and WEEE (Waste Electrical and Electronic Equipment), both of which I discussed in this column about a year ago, have specific reporting requirements from the initial design on down to the piece part level. In RoHS, for example, you cannot have more than 100 parts per million of lead. Ensuring that entails tracking the lead content of each supplier’s and subsupplier’s components.

Now let’s say you are ordering resistors for circuit boards. Most likely there will be more than one supplier, in which case you need to ensure that all the potential suppliers also comply with RoHS requirements. There’s no competitive differentiation here. Either you comply and can prove it or you can’t.

Companies trying to accomplish this with existing PLM systems are having problems, according to Eric Larkin, CTO at Arena Solutions. “The data model wasn’t designed with this in mind,” he says. “You end up doing customization, and when you are all done, it still ends up being a problem.”

A Fortune 100 company such as Honeywell, however, isn’t going to scrap its current project management systems in favor of an SaaS-only solution. Honeywell deployed 10,000 seats of an SaaS service from eProject to serve as a distributed product management solution that goes out to partners, consultants, outsource providers, and suppliers in the so-called extended enterprise.

Imagine the difference between deploying 10,000 seats of an on-premises application across hundreds of partners, versus sending those partners a URL. SaaS fits. It is easier to set up and get going, according to Christian Smith, vice president of sales and marketing at eProject. And he’s right.

With eProject, for example, the APIs are exposed so that Honeywell executives can grab project data and merge it into their overall executive scorecard.

Obviously, in the midmarket, where many companies haven’t deployed a project management or PLM solution, SaaS also makes sense. Content collection is the biggest area with which companies are struggling, says Erik Karosfsky, senior analyst at AMR Research. Today, more often than not it becomes a global affair, involving dozens if not hundreds of companies.

SaaS can help. Before you commit to the next packaged solution, perhaps in your due-diligence process you should consider software as a service.