We have already talked about SaaS in various levels of detail here on this blog.  However, recent conversations have me thinking about it again.  The basic point of the conversation was around the subject of “What size company is the right size for SaaS?”

One of the common theories seems to be that only small companies benefit from SaaS.  This is because of issues like affordability, internal capability, and speed of implementation or similar topics.  However, more and more news stories are about the other extreme size of company.  These are the companies that have multi-national presence, definitely have the capability and could afford to implement their own applications and yet they are using SaaS.

Everybody has an opinion about if SaaS is right and there are mathematical models, ROI models, countless organizational reasons for a company to lean one way or the other when thinking about using SaaS.  But, while the question we discussed was more about the company size then it was about specific reasons, we decided that our question had the answer of :  “Any size.”

In the end, the question of “What company is the right size for SaaS?” is much more about the internal situation of each organization AND of the application in question.  There are a myriad of reasons to use SaaS, and a company of any size might use SaaS for one or more applications.  A large company might need SaaS for one application and no others just as much as a small organization.

Why go with Software as a Service (SaaS) for Project Server?  There are numerous reasons but here is a partial list of some of the items to think about, concentrating on the fact that SaaS for Microsoft Project Server is cost effective and allows for faster Return on Investment (ROI). 

Numerous factors affect the overall calculations for ROI and for the Total Cost of Ownership (TCO) of Microsoft Project Server; including, but not limited to:

·         Hardware cost

·         Software cost

·         Licensing fees

·         Installation administration

·         Procurement administration

·         Software upgrade cycles

·         Hardware upgrade cycles

·         Software administration

·         Hardware administration

·         Maintenance training of employees

·         Employee continuance issues

·         Management to coordinate and track support

·         Help Desk or other support functions

·         Data storage cost

·         Dedicated or consumed employee salaries

·         Multiple location coordination (systems and personnel)

·         Administration learning curves

·         IT accounting issues – depreciation, budget allocation

·         Flexibility to easily and quickly expand footprint

In a recent study by InformationWeek titled “Software as a Service Study” when asked what the biggest challenges with on-premise business applications were – 57% responded that the cost of IT staff resources required to support/manage were the largest issue.  Following that were the cost of upgrades and the maintenance costs.

For a tool like Microsoft Project Server, it doesn’t make sense to add headcount to maintain the server.  However, it also can’t be ignored.  This means that the training for and maintenance of the Project Server and its unique challenges are often put on a full-time employee who is most likely already at full capacity.  This tends to result in the “new” work of maintaining the Project Server becoming a secondary and lower priority task and often results in a less than optimized technical environment.  That is another great reason to go with SaaS – the dedication of the people maintaining the technical environment.

Other factors to consider are the size and procedures of the organization.  There are studies that try to predict the best company size where SaaS fits best.  However, I think that while SaaS works very well for smaller companies due to the inability to have internal resources do all the required work I think that the organization’s setup and methods affect the need for SaaS even more.  For an organization looking to maximize ROI and minimize internal ongoing costs, the SaaS model allows for a fast ROI and the ability to concentrate internal resources on existing technologies or other new projects.

While exact dollar figures are always specific to an organization’s environment such as user cost rates, licensing agreements, hardware and software purchasing agreements and numerous other variables, here are some generic ROI numbers based on retail market pricing.  This is an attempt to compare the ROI of SaaS and internal implementation of Project Server.

By these figures, it takes two full years before the ROI of doing an internal implementation matches the ROI from using SaaS.  (Based on the implementation cost difference and then the monthly difference.)  And, as is commonplace with technology, the servers will most likely have to be updated or upgraded or replaced in the meantime, numerous patches will occur and other variables that come with the passage of time will increase the costs of the internal method.  Patches and server updates are costs that are borne by the SaaS provider during the contracted time period.

Microsoft Project Server isn’t the most complex software or server that Microsoft produces.  However, it does require SQL 2000 or SQL 2005, Project Server 2003 or Project Server 2007.  Depending on how you set up the server(s) that manage your installation also require customizing the systems and your ability to reach Project Server over Internet Explorer (or other browser).  Then, there are backups that must be performed daily and the patches to the operating system that regularly come out.  This requires somebody to maintain the hardware and software and be on call 24 hours a day, 7 days a week.  Plus, there are the costs to license the software.  And, in some cases, the department that wants the tool isn’t the IT department, so they have no inherent ability to implement this themselves.

So, what is the solution?  Software as a Service, or SaaS, is one great solution.  None of the technical requirements are reduced – but the risk to the company is transferred to the provider.  The provider of SaaS is the one that has to have somebody available at all times for Project Server.  They have to be able to maintain the server for you.

Microsoft has even jumped into this arena with their Software Plus Services idea.  This is really just SaaS with a different title.  While many companies are jumping into SaaS in many areas of their business, not very many are using it for Microsoft Project.  There was recently a cover story in ComputerWorld about companies that are successfully using SaaS.  (http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=325805)

For many small companies the expenses and resource requirements are too much.  For other companies, the maintenance and effort for Microsoft Project Server and SQL Server aren’t high enough on the priority list to be given the attention that they deserve.  In both these cases, SaaS provides a great opportunity to allow the business operations of the company to continue working without the worries of Information Technology.

Microsoft Project Server works great in the SaaS model and we have implemented for organizations of all sizes.  If you are looking at Microsoft Project Server and aren’t sure about how/when/where to install it or maintain it, I would recommend looking at SaaS.