The continued rise of SaaS-delivered IT service management

Last week, BMC announced its IT service management (ITSM) on-demand solution and Service-now.com quietly delivered the Winter 2010 release of its SaaS for IT service automation offering. As expected with a true SaaS solution, the upgrade was delivered to customers with no downtime and all customisations preserved. Looking forward, Ovum has no doubt that SaaS ITSM solutions will continue to steal market share from their on-premise siblings, as evidenced by the recent announcement of PepsiAmericas as a Service-now.com customer.

SaaS delivery of ITSM capabilities will forever change the ITSM software landscape

SaaS continues to gain much publicity and vendor backing, and a growing corporate acceptance as an immediate opportunity to quickly and flexibly deliver business-enabling IT services at a lower cost. The ITSM tool market is rapidly filling up with SaaS-delivered solutions from SaaS-only vendors, new dual-play vendors and traditional ITSM vendors adding SaaS versions of existing ITSM offerings, as evidenced by BMC’s announcement of controlled availability for BMC Remedy ITSM Suite On Demand. After the functionality and capability additions necessitated by the move from ITIL V2 to V3 in 2007, the SaaS delivery of ITSM-enabling capabilities is the biggest shift in the ITSM product landscape in the last five years, and it is quickly gaining traction.

SaaS is a good fit with ITSM enablement, with ITSM a low-risk entry point for organisations seeking to ‘experiment’ with SaaS

A major benefit of SaaS for ITSM is that it is aimed directly at the heart of the now commonly overstretched IT function – scarce IT resources can be redirected away from internal IT systems to focus on the delivery of business-critical IT services. However, for many organisations the key benefit of SaaS is its simple, subscription-based pricing model – usually a cost per month (or year) per user that covers everything needed to operate, including support and maintenance. This provides a lower and consistent level of expenditure that is opex rather than a capex investment. However, a lack of clarity over the meaning of SaaS can cause problems for procuring organisations. While the transferral of the application, hardware, and support and maintenance activity to the vendor and a better TCO scenario are relatively black or white issues, there is an area of greyness to traverse related to the technology that sits behind the ‘vendor curtain’. A SaaS solution must be architected such that the customer is able to self-customise its ‘application instance’, with these customisations preserved through what should truly be an effortless upgrade process. Without these facilities, the SaaS business case is not so compelling.

SaaS ITSM vendors will continue to catch traditional on-premise solutions in terms of product functionality

SaaS vendors often have multiple releases per annum, compared to the 12- or 18-month release cycles for on-premise tools. As a snapshot in time, Service-now.com has 11 ITIL v3 processes with PinkVERIFY certification, compared to BMC’s 11 and CA’s 14. Its Winter 2010 release does not include support for any new ITIL v3 processes, but it does deliver key functionality and new features requested by its growing customer base. However, its Spring 2010 release will organically develop and deliver new applications, such as run book automation, field service, more shared services and project portfolio management, to complement and enhance existing capabilities.

It’s not just SMEs buying into ITSM on demand

BMC is a key player in the enterprise ITSM tool marketplace, with its Service Desk Express Suite and Remedy ITSM Suite offerings making it the IT service desk market leader in terms of installed customer base. Its shift into SaaS is a shrewd, if not necessitated, move given both the increasing enterprise customer interest in SaaS-delivered ITSM capabilities and the frequent customer migration from an on-premise to SaaS delivery model. To demonstrate the enterprise-level credentials of SaaS ITSM offerings, Service-now.com’s latest high-profile customer addition, PepsiAmericas, serves more than 200 million customers in 17 different countries in North and Central America, the Caribbean, and Central and Eastern Europe, with 20,000 employees generating $4.9 billion in annual revenues. It joins a number of large corporate additions to Service-now.com’s customer base at the end of 2009 that have migrated from on-premise to SaaS-delivered ITSM.

Originally published at http://www.ovum.com/news/euronews.asp?id=8350

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