Q:  When should a company use software as a service (per user/per month with hosted hardware and software)?

A:  Whenever possible.

True story.  Yesterday in St. Louis we had terrible storms and a tornado warning for downtown (very rare here).  I was in the middle of a demo and ended up huddled in an interior hallway with the CIO talking about this very subject while we waiting for whatever would happen.

It was hard for them (very old company) to make the transition to SaaS but he knows that they must.  He explained that resources were limited and no one considered it a career path to support someone else's software.  The support costs are very high as vendors have to travel on-site and the support is slow.  Then there is the cost of the hardware, energy costs to run / cool the hardware, the operating system/db/supporting software, etc.

I explained to him that a small fraction of us SaaS providers really do have world class data center operations.  We deploy top of the line servers in a top tier data center, have off-site backups, have a backup data-center, and even have 24/7 hot spares ready and waiting.  I explained I started hosting the VPMi 5 years ago before it was SaaS and I did it because I needed to insure the best possible user experience.  Since this is all we do we know how to size, scale, and tune our systems.  It wasn't a business model so much as a way to have the best possible experience for users.  The fact it saves US BOTH money is a plus

In the end he really loves having a SaaS account.  If something is wrong there is no finger pointing or wondering who is at fault and who is going to make it right.  That alone is worth it for most CIOs.

Luckily the storm passed and he shook my hand and committed to moving forward with SaaS and VPMi.  It was a great day for both of us and reminded me that the more things change (SaaS, Web 2.0, Collaboration) the more they stay the same (focus on the customer, understanding requirements, building the people/processes to support technology). 

SaaS at its best is just a better way to satisfy the end users and insure the system runs at its full potential.  Everything else is icing on the cake.

Warm Regards,

Nick Matteucci, Co-Founder www.VCSonline.com
VPMi = Simple + Sensible + Supportable SaaS Project Management

About the Author: Nick Matteucci is a co-founder of VCSonline.com a web 2.0 project management software company headquartered in St. Louis Missouri. Mr. Matteucci is also an active board member and the Chief Technology Officer for the PMI ISSIG. When not obsessing over virtual project management best practices Mr. Matteucci enjoys spending time with his wife and three small children. He also enjoys travel, running, and all things automotive.

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