For many businesses, the damage of COVID-19 has come in the form of lost productivity with workers banned from the office under social distancing regulations. For others, however, productivity hasn’t taken such a hit. The more resilient companies, we’ve found, are the more technology-enabled ones, relying on, among other things, cloud-based applications.
Top software-as-a-service (SaaS) products, including those offered by Microsoft, Salesforce, ServiceNow, SAP (including its S/4 and C/4 HANA product lines, along with Ariba, SuccessFactors, Concur, Hybris and other solutions), Oracle (including NetSuite), Workday, Adobe, Infor and others, have shown they provide higher performance and reliability for remote workers than on-premises applications. It boils down to a simple design principle: cloud-based applications are designed to perform from anywhere with an internet connection. They also provide an easier environment for technical support.
The answer seems clear: move critical business systems to SaaS. But migrating to SaaS solutions is more than a simple technical upgrade. It has significant hidden costs and deployment risks that must be managed proactively. For starters, the IT budget will need to be reworked to support enhanced work-from-home capabilities.
Here are five steps to ensure compliance and resilience in your migration to SaaS.
Align the business strategy. Companies embarking on a SaaS journey often fail to define what will be different when the new technology is deployed. A SaaS migration should spur significant changes in everything from customer interaction to internal workflows and information management. This will mean changes to your infrastructure needs, your technical support model, your contracts and, most importantly, the way users engage and conduct work. Self-service functionality increases availability and control, but it also can shift work from centralized processing hubs to end users. SaaS provides the ability to accelerate deployment of new functionality. Take time to think through how this aligns with your operational strategies.
Define the business case. Business cases for SaaS often fail to account for the true costs of migration and the necessary work involved in sunsetting legacy systems. Consider how you will decommission older technology and its associated support. Determine if costs for new SaaS subscriptions align with retiring costs of software maintenance. Account for potential costs related to schedule slippage or changes in requirements. And be sure to incorporate into the business case a realistic deployment plan, including data conversion, integration rationalization and process redesign, along with necessary internal and external resources. Think broadly about potential benefits of SaaS deployment – including increased revenues due to faster product rollouts, data-based production decisions, better use of resources or improved workforce planning – and budget what is necessary to enable these benefits. Some SaaS vendors offer business case models that account for many of the features and benefits of the products, but don’t let this oversimplify your thinking about the internal costs and dependencies you are likely to face. Be sure to account for testing the new solution, sunsetting the old, creating new business processes, driving organizational change management and re-skilling staff.
Align dependencies across your independent software vendor (ISV), systems integrator (SI) and application management services (AMS) providers. Companies frequently solve for each major component of a SaaS deployment without an understanding of the interdependencies between the involved parties or the sales tactics at play. A quick glance at any ISV or SI website will list “partnerships,” which are thinly veiled market incentives that maximize their respective revenues and lock in clients for long-term single source relationships. The truth is, partner-recommended solution architectures are often engineered to de-risk the SI’s accountabilities and maximize the products that help the ISV penetrate new markets. By understanding the dependencies and the component transaction streams between all the players, companies can reduce the total cost of the solution by 20 percent or more. Remember that migrating your core business systems to SaaS is a strategic move that requires well-informed, data-based decisions. More agile, collaborative, solution-based methodologies such as ISG FutureSource™ can accelerate your evaluation process and provide you the market insights and data you need to understand key supplier and product-specific commercial risks and technical dependencies.
Reinvent your business processes. In migrating to SaaS applications your goal should be to modernize the delivery of your business services to end users, which includes simplifying and automating workflows, integrating strategic partners and unleashing the power of data into management dashboards. It requires following through on and refining the objectives that were part of the business strategy. The true value of SaaS is achieved only when processes, organization structures and job profiles are redesigned to take advantage of the functionality and accessibility provided by cloud technologies. Apply advances occurring elsewhere to your environment. ISVs leverage user communities, for example, to drive a regular stream of enhancements. The pace of transformation needs to be fast, and Agile approaches that incorporate design thinking and other techniques will be critical.
Manage the transformation to realize value. If your business case is thorough and budgeted correctly, you have earmarked sufficient funding to cover the critical tasks of program management, process transformation, organizational change, training and communication to best leverage SaaS technology. Establishing strong governance across workstreams and resourcing your program with your best talent are two of the most important things you can do to deliver on time and on budget. Build a transformation management office that connects workstreams, including software deployment, testing, process re-design, delivery model changes and organizational change management. This work will help to identify critical dependencies, mitigate risks for the whole project and avoid costly surprises. Relatively small investments here will pay major dividends by avoiding project overruns that can range from 25-75 percent or more of the budget.
ISG helps companies accelerate business resiliency deploying SaaS in the smartest, most cost-effective manner. Join us to discuss how to drive resilience, save costs and increase agility with SaaS. Or contact us directly for help getting started.
About the authors
Bill Huber is Global Partner – Digital Platforms & Solutions and a well-known thought leader in the field of technology, sourcing and transformation. In his current role, Bill is the global leader for ISG’s Software Advisory practice, which assists clients in delivering savings, de-risking their software environment, maximizing the business value of their third-party technology investments and accelerating their digital transformations.
Deb leads ISG’s Cloud Business Systems practice, drawing upon extensive experience in shared services, outsourcing and HR management to help clients define and implement their Cloud ERP and HR technology and service delivery strategies. Deb helps enterprises assess the business case for ERP/HCM SaaS solutions, understand the capabilities and experience of leading ERP/HCM SaaS providers and integrators, and formulate and execute effective negotiation strategies for ERP/HCM SaaS software and implementation. She has authored ISG’s annual survey on HR Technology and Service Delivery Trends since 2014. Deb has 30 years of experience and has been involved in more than 150 engagements across HR, payroll, benefits, talent acquisition, finance and ERP/HCM technologies.