Edge Dynamics puts SaaS on a critical mission

Edge Dynamics, a company that analyzes transactional data for the pharmaceutical industry, is planting its flag as the first SaaS (software as a service) provider to offer a mission-critical capability in a hosted model.

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Edge Dynamics CEO John McGrory says the company’s CCM (Channel Commerce Management) suite of applications manages incoming orders from wholesalers and retailers and the data surrounding it against business policies.

First or not, the real question is, Will the SaaS delivery model every be widely adopted by enterprise-level organizations for use with mission-critical applications?

Beth Enslow, senior vice president of Enterprise Research at Aberdeen Group, says, yes, we are seeing more companies willing to use SaaS for such core business processes.

Unilever is using LeanLogistics transportation management system. Hitachi uses E2open to manage order procurement for thousands of suppliers, and Columbia Sportswear uses a company called TradeCard for financial settlement activities with its suppliers in Asia.

The Unilever solution has a unique, so-called “community” benefit. Many of its trucks deadhead back from the West Coast to the Midwest. The online solution makes it easier for Unilever to find other companies that are willing to ship their products back on these otherwise empty trucks.

Using SaaS to manage the cash flow, Columbia Sportswear has been able to speed up the settlement process with its Asian suppliers and take a discount for early payment.

Peter Graf, executive vice president of SAP product marketing, says the biggest obstacle to adoption of SaaS by the enterprise is its multitenant architecture. Graf points to recent “instability” problems. Graf was too polite to say it was Salesforce.com, so I’ll say it. As we know, some glitch brought down its datacenter, twice.

In recognition of the problem, SAP deploys what it calls “isolated” tenancy, which creates copies for each hosted customer. Companies can also choose to what degree they want to isolate their application on hardware and software or to what degree they are willing to shar resources.

This is a hybrid solution that allows SAP to basically offer SLAs at different levels depending on how much multi they want in their tenancy.

Compliance is also driving companies to take a second look at SaaS.

Cherie Hernandez, senior product manager at CT, a legal services company, is partnering with Merrill Lynch to offer ExecuFile, a SaaS solution for Section 16 of Sarbanes-Oxley. The application automates the filing to the Securities and Exchange Commission notice of a “beneficial change in ownership of company stock by insiders” within 48 hours of the transaction.

“You can’t really do what ExecuFile does in 48 hours without a major IT project,” Hernandez says.

A recent report by Aberdeen’s Enslow, “The On-Demand Tipping Point in Supply Chain,” found that among the companies considering a SaaS solution many had also adopted an IT portfolio strategy of “investing internal IT resources on business differentiating areas” and using external technology for SaaS.

The future will bring a hybrid of mixed deployments. And at the end of the day, Enslow is right when she says it is important to understand the different models and then let the “buyer beware.”