ECM and SaaS: How Strong a Marriage?

The SaaS (Software as a Service) computing model has been garnering attention recently. With this approach, companies no longer have to maintain servers and run a data center. In certain cases, they can reduce their IT expenses and roll out new services very quickly. Because of the potential benefits, it has gained traction in market segments, such as CRM. However, acceptance has been slow to take hold in the Enterprise Content Management (ECM) space, although a couple of vendors are trying to change the status quo.

ECM systems have become popular for a couple of reasons. Corporate data is on the move: employees generate information on an ever expanding variety of small, powerful devices, such as laptops, netbooks, and smartphones. Information also has taken a growing number of forms, such as databases, text documents, forms, images, and Web content.

In addition, a widening array of regulations requires that companies monitor and manage their information effectively. "Many corporations are struggling with questions, such as 'What information do I need to keep?' and 'Where can I store it?'," stated Kathleen Reidy, a senior analyst with market research firm the 451 Group. ECM products can help answer those questions because they provide a central repository for company data.

However, some of these products' roots stretch back a decade or two, so they cannot be easily transformed to SaaS solutions. As a result, many of the well known ECM suppliers have not yet embraced this model. Instead, vendors, such as Hyland Software, SpringCRM and Xythos Software are pushing SaaS options into the marketplace.

There are a number of reasons why companies may be interested in this option, starting with money. ECM systems are quite expensive, prices usually start at $100,000 and often race past the $1 million mark, depending on a system's breadth and complexity.  With a SaaS solution, a company can avoid the upfront costs that come with a new deployment. Consequently, they may be able to get an ECM project off the ground even though money is tight.SaaS services also have the potential to save companies money. Compared to purchasing ECM software and servers and then maintaining them, paying a monthly charge could be less costly throughout the life of the service.

However, the potential savings revolve around the type of system a company deploys. "If a corporation has a relatively vanilla implementation, then the chances are good that the savings will be there with a SaaS solution," noted Mark R. Gilbert, research vice president at market research firm Gartner Inc. "However, if the company requires a lot of customization, then it will probably not save much because customers pay extra for any unique features." Those extras stem from additional integration and consulting charges.

Applications, including ECM solutions, are becoming more complex, and many companies are struggling to develop, enhance, and maintain the in-house expertise needed to effectively run different systems. A SaaS supplier may be more familiar with typical deployment and maintenance issues and therefore implement necessary changes more quickly or find more innovative approaches than an in-house staff.

Reduced staffing is a possible benefit that SaaS suppliers tout. Companies can take employees off of mundane maintenance tasks and have them work on more important items. In certain cases, a company can reduce head count or avoid adding staff because the vendor maintains the ECM system.

However, there are some possible downsides with the service approach. Concerns often start with the fact that a business no longer has control over its information. Instead it is handed over to a third party.Some companies may not feel comfortable with the change. "Larger corporations are often hesitant to go with a SaaS solution than because they feel like they lose control over their corporate data," stated Gartner's Gilbert. "Consequently, small and medium businesses have often been the target customers."

New security challenges arise. Maintaining proper security checks becomes more difficult when information no longer sits in a data center behind a firewall and other security systems. The customer now has to find a way to let the SaaS supplier in but still restrict access to other outsiders. In addition, the client has to trust that the vendor has put sufficient security checks in place to ensure that its data center is secure.

Because SaaS solutions are relatively new, best practices are just beginning to emerge, so how to ensure that these services are secure is still a work in progress. In addition, it is unclear if a SaaS approach meets the growing number of government regulations, such as Sarbanes Oxley.

Because of the importance of data being stored, SaaS options have been taking root more slowly in the ECM space than in other software sectors. However, as SaaS solutions mature and become more widely accepted, their influence in this sector is expected to grow.

-end-Paul Korzeniowski is a freelance writer who specializes in data storage issues. He is based in Sudbury, Mass. and can be reached at [email protected].