SaaS is waiting to be noticed

Early adopters make case for software as a service, but many agencies are not buying it

Analysts: Education before sales

If government agencies are to use the software-as-a-service model more frequently to meet their needs, SaaS vendors need to pick up the pace, some analysts say.

“The general awareness of SaaS in government is not where it needs to be,” said Tim Cashman, a consultant at Input, a government marketing company.

“As many as one-third of all federal [information technology] people are not aware of SaaS, and those who are don’t know how to define it.”

Cashman added that major systems integrators who wield great influence in the government market need to start working with the SaaS vendors.

A similar situation exists outside the federal government, said Chris Dixon, Input’s manager of state and local industry analysis.

“It really depends on the vendors coming forward,” Dixon said. “If they are waiting for governments to put SaaS into their [requests for proposals], they’ll be waiting a long time.”

— Brian Robinson

Software as a service is not as farfetched an idea as it once seemed in the federal market, but analysts say many agencies are still taking a wait-and-see approach.

SaaS, in which an organization pays a regular fee to use software hosted and managed by an outside party, is catching on in the private sector as a viable answer for certain business needs, such as customer relationship management.

The attraction is obvious. SaaS customers don’t have to pay for the software, and they have none of the integration and maintenance problems they might encounter if they brought a solution in-house.

And they can be up and running with the software much sooner.

Government agencies have not jumped on the concept, but that might be about to change. Just as private companies had to work through their doubts about SaaS, government users have been assessing the technology.

“Government is about five years behind where the private sector is” on the adoption of SaaS, said Dan Burton, senior vice president of global public policy at Salesforce.

com, a leading SaaS vendor. “There are lots of pilots going on to see how the SaaS security model works, how the major integrators handle SaaS and so on.”

The market is now waiting for a signature deal with an agency before that “aha” moment happens that pushes them over the edge, Burton said.

Integration woes Some agencies have already found SaaS to their liking, including the Federal Consulting Group, a fee-for-service franchise operation at the Treasury Department that provides consulting and performance measurement services to agencies. FCG, which has no information technology department of its own, has been using SaaS for several years.

“We use Salesforce.com products ourselves to track the agreements we have with agencies, and we use [the SaaS model] for some of the software type of services that we provide to agencies,” said Ron Oberbillig, FCG’s chief operating officer. “We’re seeing a growing attention [to the potential of SaaS] from across the whole spectrum of agencies.”

FCG employees like not having to deal with configuration issues that arise when they install software on their own systems, Oberbillig said. “It’s just like having our own system but without the problems.”

FCG, for example, helps agencies measure customer satisfaction with their Web sites and call centers using the American Customer Satisfaction Index, a nationally accepted rating that agencies can use to internally manage resources and comply with the reporting requirements of the Government Performance and Results Act.

“For the most part, for agencies to use these SaaS products takes nothing more than adding a few lines of JavaScript code to redirect Web site visitors to another site on the Internet,” Oberbillig said.

New Jersey Transit decided several years ago it needed to replace its CRM system, and after a three-month trial, it opted to go with Salesforce.com’s Web-based solution, said Dennis Martin, NJT’s senior director of customer service. The transit authority deployed it in July 2005.

Before that, NJT had used its own system to capture customer complaints and manage and direct its resources. Customers were certainly making lots of complaints, Martin said, but the problem was that NJT’s system wasn’t capturing many of them.

Since the Salesforce.com solution was adopted, that has changed. “We’re now capturing around six times more of the complaints and suggestions our customers make, and we are able to respond much quicker,” Martin said. “Plus, we can now better analyze the results and report them out to our operations group so it can make better decisions on policy and operational changes.”

The SaaS product also turned out to be a fit for NJT’s budget constrain ts. Because the system had to be available to users at office locations statewide, Martin said, he needed to minimize equipment purchases while maximizing the system’s capabilities.

The result is that NJT’s customer service department has become “a definite resource at the table” for executives’ decision-making, he added.

SaaS has become a mainstream commercial product that government agencies can exploit to their advantage, Burton said.

The Office of Management and Budget recommended SaaS as an option in a July 2007 memo to department and agency leaders about complying with the Federal Information Security Management Act.

In the memo, OMB said agencies should use SaaS if they can save money, improve agency performance and protect data by doing so.

“A lot of government customers simply don’t know about SaaS, plus [government is] a very risk-averse culture,” Burton said. “Our main job now is one of education.”

About the Author

Brian Robinson is a freelance writer based in Portland, Ore.

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