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Where SaaS Works

The debate around software as a service usually focuses on whether it's better or worse than conventional licensed software. The answer is neither--businesses that have adopted SaaS will tell you it's good for some things and not for others.

But that's only one lesson gleaned from this bigger truth: You can't use the same metrics to assess SaaS as you use for conventional software. To understand SaaS requires a new mind-set.

When IT and business managers shop for software, important attributes include the ease with which it can be customized and how well it can integrate with other systems. But SaaS offerings typically can't be customized, only configured. And integrating SaaS with on-site applications can be more difficult than just integrating two on-site apps, often requiring vendors' help to deal with code dissimilarities.

This doesn't mean SaaS is inferior to conventional licensed software, only that it has different strengths. Many businesses are coming to accept those differences: In a survey of 471 business technology professionals by InformationWeek Research, a quarter of whom are SaaS users, SaaS got high marks for its upgradability, reliability, and ease of use. SaaS users were less enthusiastic about its cost, with only 32% saying they found SaaS affordable. It also didn't do well on customization, integration, and the ability to switch among vendors.

Life Time Fitness health club chain will roll out Workday's human resources software service to its 17,000 employees in early August, following a trial with 600 employees launched last fall. The company had considered customizing on-site software from Oracle's PeopleSoft or Lawson, but went with Workday. "Workday is extremely configurable, but not customizable at all," says Matt Prise, a Life Time Fitness project manager.

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