SaaSing out business communications

You might think "Software as a Service" (SaaS) is an application-specific concept that has little to do with corporate communication technologies. But in this age of voice, data and IT convergence, SaaS could affect the way businesses consider connectivity.The lines between various aspects of IT infrastructure are blurring - application architecture informs telecom infrastructure, voice traffic takes on data characteristics, and data transmission rates inform application performance.SaaS exemplifies this. Some SaaS systems incorporate VoIP and video links that essentially make communication part of the software experience, rather than a stand-alone function. Other SaaS offerings connect with IP phone systems - the latest iteration of computer-telephony integration (CTI).What does it mean for network and telecom management? We asked around. Consider this a communication-specific SaaS primer.What is SaaS?Sourcing software as a service means companies rent applications for a monthly fee from a SaaS provider. Sound familiar? It's not new - especially for business managers who've sourced telecom offerings this way for years.It's an old idea in the application sphere, too. A variation of SaaS exploded during the dot-com haze: the Application Service Provider (ASP) model.ASPs hosted software for companies, so customers didn't have to manage the application in-house. This was supposed to bring cost savings - fewer IT resources would be required to maintain the software.But the model wasn't perfect. The apps most often turned over to ASPs were bulky enterprise resource planning (ERP) and customer relationship management (CRM) platforms."The applications themselves were not that easy to use, even if you had someone else hosting them for you," says Jeff Kaplan, managing director of THINKstrategies Inc., a SaaS consulting company in Wellesley MA. "And users still had to pay the upfront perpetual licensing fee."ASP architecture was ungainly. Application service providers hosted an instance of each application for each client, essentially duplicating the complicated software infrastructure of numerous organizations. Operating costs were high and profits were thin, Kaplan says.Consider the era. "This was during a time when companies...were being told technology is a key competitive differentiator," he notes. "They were reluctant to use a third party - especially these upstart ASPs that were untested. And as they began to fail, that led to a lot more companies feeling they couldn't depend on them."Many ASPs had failed by 2004. But soon after, industry observers were talking up a new twist on the hosted model: Software as a Service. According to proponents, it shares ASP's main benefit, offsetting the app-management burden. But it trumps its predecessor in numerous respects:SaaS infrastructure supports many clients at once, eschewing the costly one-to-one architecture of ASPs;SaaS does away with perpetual licences - customers only pay month to month;SaaS applications are built for remote access, whereas ASPs had to remote-enable programs that weren't designed with that in mind.SaaS in communicationsSaaS and communications architecture are becoming interconnected. Some SaaS services incorporate voice and video to facilitate collaboration.Witness Octopz Inc. The Toronto company offers a Web-based collaboration tool for the creative set. Graphic designers, product creators and other artistic-business sorts could employ the platform to share plans, discuss packaging concepts, consider drawings, photos... whatever might require imaginative mulling. Participants in Octopz sessions can add notes, edit documents and chat via the built-in webcam interface or VoIP. "We added the voice capability...to allow customers to operate the way they want to," says Ron Mckenzie, Octopz's CEO.One of the great SaaS success stories belongs to Salesforce.com Inc. The San Francisco CRM provider survived the ASP era and has emerged as a powerful hosted tool. The company goes beyond its core software by inviting third-party developers to link their applications to the Salesforce.com ecosystem, dubbed AppExchange. Many of the programs that Salesforce.com customers can access through that platform include voice and video connections. Siemens Communications Inc.'s HiPath OpenScape, for instance, brings click-to-call, presence and conferencing capabilities into the Salesforce.com GUI, so users don't have to leave the main application to connect with clients and prospective customers."It's pretty much plug-and-play," says Ariel Kelman, Salesforce.com's senior director of platform product marketing. His company's multi-tenant architecture - a single platform that serves more than 30,000 customers - means Salesforce.com only has to build a single integration bridge between its own systems and the third-party developer's application, and then every Salesforce.com client can access the enhancement. "We're able to transfer the pain of integration from the customer to the partner."The communications technology sector is changing: hardware vendors such as Avaya Inc., Cisco Systems Inc. and Nortel Networks are transforming their products into software, and they're integrating the functions with applications and hardware from companies like Microsoft Corp. and IBM Corp. (see "Nortel fades to black"). SaaS systems incorporating communication technologies exemplify this trend. But how far will it go?"I'm not sure it will ever replace the PSTN or telecom infrastructure," says Mckenzie from Octopz. "I see it as an augmentation."Still, SaaS could be a convergence catalyst inside the enterprise, he says. "Voice is not a stand-alone experience anymore. It's part of the application. I think that makes convergence happen easier and faster."Kelman from Salesforce.com agrees. "I think it gives more opportunities to integrate voice into their business processes....Especially in a highly-regulated environment, when your agents are calling people for service or sales opportunities, you like to keep a record of all those communications, no matter what channel they come across."Jeff Bennett, VP of business development at SaaS-enablement firm WrappedApps Corp. in Ottawa, says the SaaS concept could fundamentally alter the industry's viewpoint. "There's a huge convergence happening, and people don't even know which sandbox they play in anymore. The network providers are moving more into software....You have software companies like Skype, and companies like Natural Convergence focusing on the convergence of all these areas."Carrier confusionIt's confusing - not only for business managers who must navigate these new currents, but also for telecom service providers. Where do they fit, and what do they think?"I would say before, they were afraid of ," Bennett says, recalling WrappedApps' early struggles to convince carriers that SaaS is less of a threat, and more of an aid. "Now they're embracing it. What they offer is a commodity. It's a pipe, and there's price pressure downwards every day or month. They're trying to sweeten the pot by adding mobile products, and business technology....They're trying to find ways to augment the value."WrappedApps hopes to capitalize on the carriers' need for new revenue streams. The firm is just entering the sales and marketing phase. It aims to sell SaaS-enabling technology to ISVs interested in becoming SaaS providers themselves, and telecom service providers that want to enhance their small and mid-sized business (SMB) offerings."Wouldn't it be great if those customers could go to Bell.ca and not only get wireless and bandwidth, but also their software?" Bennett says. "You could see that being fundamental to their SMB strategy. Whoever owns the services owns the customer."Octopz, meanwhile, focuses on three customer streams: SMBs in creative businesses; enterprises that want to integrate their content management systems into the collaboration platform; and telecom service providers. So far, so good. Rogers Communications Inc. sells the Octopz collaboration service through its Business Solutions arm. "They provide not only the bandwidth, but also managed services - the management of the routing infrastructure, Layer 3," says Mckenzie.Telemanagement tried to contact two carriers about SaaS, but no one was available.PitfallsCompanies considering SaaS services should keep certain things in mind, says Kaplan from THINKstrategies:It could be difficult to integrate existing applications with SaaS offerings - will the current content management system play nice with the hosted collaboration suite?Pricing varies - some SaaS providers insist customers must pay an upfront fee before the service is started. This could make SaaS less attractive to cost-conscious companies.Neither Salesforce.com nor Octopz charge upfront fees, their representatives say.On the flip side, companies shouldn't be worried about security. Most hosted-application providers have excellent protections, Kaplan says. "I can't think of any breaches that have occurred among the providers of Software as a Service - and it's not like it's easy to hide these things."Although SaaS relies on Internet connectivity to support end users, a host of technologies offers a safety net if the link is cut. Applets and smart synching techniques allow users to continue their work even when the Web connection goes down, Kaplan notes.One more observation: it seems Canadians are particularly adept at providing SaaS. "There are more companies in that Toronto-Ottawa corridor than anywhere else - both in the software as a service space, and the managed services space," Kaplan says.A SaaS-VoIP case studyFios Inc. performs forensic-data services for lawyers, the government and other officials south of the border. Based in Portland OR, it uses Salesforce.com for customer relationship management - lead follow-ups, client services and such.The company integrated the Salesforce.com service with the on-premise IP phone system, says Joe Ariello, Fios' director of corporate services. It took just 12 lines of code and a week of work - a testament to Salesforce.com's ease-of-integration, he says."It's a very rudimentary CTI integration. We have an inside sales organization. They were having to manually enter phone numbers for eight to 10 hours per day. That gets tedious. They really work Salesforce.com for leads, accounts, contacts and opportunities. Given the openness of Salesforce.com, it didn't take a genius to figure out it would be a real value-add if we could integrate both systems. We created a hyperlink that calls the Salesforce API and places the DID to our switch, and places a call....It saves our inside sales organization a considerable amount of time."A similar integration project would have taken much longer to complete had Fios used an on-premise CRM platform, Ariello says. He should know - he has worked on call centre software, ERP rollouts and telecom hardware. He says it's "very difficult" to coax legacy business applications and phone infrastructure to interconnect.SaaS is the lynchpin of Fios' integrated architecture - and SaaS could become the main lynchpin of convergence across the board, Ariello says. "The software has proven itself."Fios has built its own applications to connect to Salesforce.com, such as a recruitment management system and a sales-strategy dashboard that helps executives understand what's happening in the sales group.Ariello has considered offering the applications to the broader Salesforce.com community through AppExchange. He says he's not concerned that doing so would detract from the advantage Fios might have over competitors lacking the software."A tool is a tool," he says - it depends on how you use it. "Just because someone has a Ferrari doesn't necessarily mean they're going to go fast. They need to know how to go fast."

SaaSing out business communications

News | July 17, 2007

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