In many respects, adoption of multiple SaaS applications mirrors what happened in the 1990s as companies brought in so-called best-of-breed applications and then had to figure out how to integrate them to execute business processes that transcended any one application. “This is eerily reminiscent of 10 years ago,” says Pring, although he acknowledges that SaaS vendors typically are much better at connecting to other applications and better at using standards than vendors were a decade ago.

Back then, most enterprises decided the integration effort for best-of-breed wasn’t worth the cost, so they began adopting suites instead. The same is likely to become true for SaaS, where the first such suites are already emerging—and CIOs need to understand that adopting a specific SaaS application may put them on the road to bringing in additional SaaS applications, ones that may compete with existing suites they’re heavily invested in, says Gartner’s Desisto.

For example, Salesforce.com is intent on creating a suite based on its CRM software and its AppExchange platform through which other companies can develop plug-in applications for Salesforce.com that use the same architecture and data model, thereby eliminating the need for customization that could cause breakage when Salesforce.com is upgraded. ERP provider NetSuite has a similar strategy, though largely limited to the mid-market, notes Tier1’s Mankowski.

How to Protect Standards
Other issues arise when choosing to deploy SaaS applications, but these issues are familiar to enterprises with a history of outsourcing IT. They may not, however, be familiar to all SaaS providers, especially to those that have focused mainly on small business customers. Service levels. Because an outside entity is running the software, there’s always the fear that your enterprise won’t get the uptime levels and other services you need. Salesforce.com had several widely reported service outages last winter, confirming some CIO’s worst fears about SaaS.

“But there have been no major issues since then,” says AMR analyst Bois, with Salesforce.com or other providers. “Reliability is not as much a question as it used to be,” he adds, because SaaS providers typically deliver the same availability as most enterprises do, with uptimes of 99.999 percent. Bois does recommend that any SaaS contract include a service-level agreement (SLA) of at least 99.5 percent availability, which Bois says is the common minimum.

But don’t expect most SaaS vendors to have anticipated the need for SLAs, warns Gartner analyst Pring. Reflecting the vendors’ focus on mid-market customers, “85 percent of SaaS apps have no SLAs,” he says. Vendors targeting larger enterprises are more likely to have SLAs in place.