Enterprise IT has enthusiastically embraced Software as a Service, and Hewlett Packard is the latest vendor to indulge them with Service Anywhere, a new SaaS offering. Recent studies back up just how popular Software as a Service has become.
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According to a report by IDC, the cloud software market was $22.9 billion in 2011 and will grow to $67.3 billion by 2016, at a compound annual growth rate of 24%. SaaS-based systems management software is growing at only a slightly slower rate – 19.6%, headlined by service desk, performance management and configuration and automation.
"About 75% of the deals I see have at least one SaaS vendor on their short list," said Jarod Greene, Gartner senior research analyst focusing on service desk. SaaS-based products only represent about 10% of the market today, but he expects them to account for about 50% by 2015.
SaaS service desk products include, but are not limited to, ServiceNow Service Desk, CA Nimbus, and BMC RemedyForce, as well as offerings from smaller vendors like Cherwell Software, Hornbill and Axios Systems.
SaaS made simple
With that kind of competition, HP is wise to get Service Anywhere to market sooner rather than later. The company has a long history in the IT service management (ITSM) space with the on-premise Service Manager, which HP acquired from Peregrine Systems back in 2005. Greene said not an insignificant number of customers still run versions of that software that predate the acquisition, and they are eagerly evaluating alternatives. HP's earlier attempts at SaaS service desk, meanwhile, were underwhelming.
"Keeping customers is something HP really has to do," Greene said.
For its part, HP believes Service Anywhere delivers the goods. The multi-tenant platform provides the requisite incident, problem and change management, and because it's delivered from the cloud, it's easier to get up and running, with no up-front capital costs. It includes several embedded ITIL workflows and promises easy upgrades with so-called codeless configuration.
"When we looked at our products, we realized that tools need to be simple, simple, simple," said Bob Darroch, HP Product Manager for SaaS IT Service Management.
Service Anywhere also includes advanced functionality such as social collaboration for sharing and recording advice and communications, plus integration with the on-premise HP Universal Configuration Management Database and HP Universal Discovery via point-to-point virtual private network connections. Entry level pricing is set at $89 per user per month, and the company guarantees 99.9% uptime.
SaaS buyers need to beware
But SaaS-based software – service desk or otherwise – is not a slam dunk for every organization, cautioned Gartner's Greene.
For example, SaaS bundles often include components that an organization may not need.
"A lot of modules go unused," Greene said. "You end up buying shelfware, and that may not make financial sense."
Speaking of financial sense, organizations must ask themselves whether SaaS is really a better buy.
"Over the long term, the [total cost of ownership] is higher than if you buy on-premise," he said. "The first couple of years may be OK, but beyond that, the costs stay neutral or go up."
"That's a harsh lesson that some early SaaS adopters are starting to learn now," he added. He estimates that as many as 30% of SaaS service desk customers may go back to on-premises solutions over the next couple of years.
To protect against that, he recommends that potential customers consider vendors that have both on-premise and SaaS options, and that offer a licensing option that accommodates the two models down the road.
"What customers are really after are solutions that are easy to use, administer and to sell to the business," he said.
“SaaS fits that bill today, but on-premises could soon deliver that too."