Colorful Spices by Gavinbell

Guest Post by Nalneesh Gaur

Late last year in a post titled “The Future is Partly Cloudy,” Chris Curran and I wrote about the future of cloud computing where we explored pathways for cloud adoption. In this post, I explore consideration when buying SaaS applications.

Is the vision of business purchasing all its software as a service (SaaS) over the web finally taking shape? The recent launch of Google Apps Marketplace would suggest that is the case – at least for small and medium businesses. Google claims that its service is used by over 2 million businesses small and medium businesses and over 25 million users, the applications themselves are created by Independent Software vendors (ISVs). Google’s offering compels businesses of all sizes to move to the clouds where businesses pay for what they use and shift expenses from Capex to Opex.

Google’s offering provides unprecedented integration with their data in Google applications such as Gmail and Google docs. This enables ISVs to integrate with the Google App and Enterprise data in ways previously not possible. For example Salesforce for Google Apps integrates Gmail, Contact with its CRM solution.

Google upon authorization will permit the ISV to access a business’s Google data. Vendors can also maintain additional data stores of their own. For example, Salesforce for Google Apps maintain its own CRM data stores and allows Google App users to integrate with Gmail, Google Talk and Google Docs.

Google is not alone in launching a SaaS market place; Salesforce.com offers the Salesforce AppExchange that extends the Salesforce CRM platform. SaaS markets obviously want more customers to buy their services, because an integrated offering results in customer lock-in and therefore a predictable source of revenue to them.

Google Apps Marketplace Considerations

Not all customers are small businesses; enterprises such as City of Los Angeles and Genentech are also using Google applications. Customers looking to adopt SaaS obviously get tremendous flexibility but they should look before they buy, here is why:

1. Integration between SaaS vendors could pose a challenge. So for example, there is no standard method for integrating data held in Saleforce.com data store, Google Docs and your 3rd party tax accounting application.
2. The process of integrating multiple applications into a mash-up or portal will require additional effort, you will need to utilize the Google App Engine, the underlying Google Apps framework. Google App Engine supports Java and Python environments.
3. Before purchasing new applications understand which ISV applications are storing data outside of Google. This is not only useful in understanding how the data is protected but also in understanding the complexity of terminating the ISV.
4. User experience should be taken seriously. Users prefer the tools they use, lack of interoperability and a steep learning curve could result in declining productivity and poor user experience. This obviously does not bode well for the SaaS vendor, but it also hurts the business case for SaaS for enterprises that are considering it.

Overall Google Apps Marketplace has much to offer in terms of benefits at very attractive price points. As a result, we can expect other leading SaaS players to establish similar market places, broader business adoption.

What would you consider when buying SaaS applications?