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IT Service Management Software as a Service takes off

Cash-strapped IT organizations have turned away from on-premise software and now favor the rapid software upgrades that come with Software as a Service-based IT Service Management and service desk applications.

Under pressure from upstarts like, the Big Four systems management vendors have stepped up their systems management Software as a Service (SaaS) efforts. Of the four, Hewlett-Packard has a large SaaS portfolio, and BMC Software, CA and IBM have dabbled in SaaS. But now all of four have gotten serious about ramping up their offerings.

For more on IT Service Management and Software as a Service for data centers:
ITIL vets turn to SaaS-based tools to ease upgrade hell

Addressing IT concerns about Software as a Service

Forrester analyst Peter O'Neil on Big Four ITSM SaaS offerings

And of the IT management tools now available via the SaaS model, service desk and other IT Service Management (ITSM) software have gained the most traction with IT managers.

SaaS-based systems management tools are attractive because they place the burden of software installs and upgrades back on the vendor. The model also allows IT shops to pay for tools as a recurring operating expense rather than be compelled to tap tight capital budgets.

On the downside, however, SaaS delivery can spark security concerns, translate into occasional slow application performance, and support less customization than on-premise software.

Large healthcare shop considers SaaS-based ITSM tools
Steve Carrell, director of service support at Intermountain Healthcare, currently runs BMC Software Inc.'s Remedy ITSM tool but, going forward, may consider a SaaS-based approach.

 The thing that's appealing about the SaaS model is not having to worry about upgrades.
Steve Carrell,
director of service supportIntermountain Healthcare

"The thing that's appealing about the SaaS model is not having to worry about upgrades and staying current," Carrell said. "It takes a lot of effort to keep up with these things, and having a service on demand gives you the ability to let that stuff take care of itself."

Intermountain Healthcare runs an in-house IT shop that serves some 30,000 employees. "We log about 1,000 service desk tickets a day, so anything that can make that job easier, we want to do," Carrell said.

Carrell, for one, was not concerned about potential security risks in running ITSM software off-premises because of BMC's encryption technology. "Even if somebody wanted to see that kind of information, it's not a big deal," he said. "We're in healthcare, so we comply with HIPAA [the Health Insurance Portability and Accountability Act] and PCI [Payment Card Insdustry], but this isn't that kind of data. I don't see that as a big concern."

Whether or not Intermountain moves to SaaS will depend on cost and flexibility.

"We're anxious to see what the pricing looks like. If we pay more on license fees, will that outweigh the cost of having people administer the system? It has to be feasible for us to go further," he said.

Intermountain's customizations may also prove an obstacle. "I don't know what kind of flexibility we'd have as a service, or if we'd have to modify some of our processes," Carrell said. "We'd do it if it was a reasonable amount, but if we have to modify processes significantly, that would be a barrier."

ITSM SaaS model works for healthcare provider 
Sentara Healthcare, a Norfolk, Va.-based company that serves nine hospitals, 350 patient care facilities, 26,000 employees, 1,500 servers, 26,000 PCs and 5,000 network devices, uses HP's ITSM software as a service.

There is still some level of maintenance ... but it's really minor.
Jason Siegrist,
technical managerSentara Healthcare

Jason Siegrist, the technical manager for the company' enterprise management team, oversees ITSM and IT Infrastructure Library (ITIL) implementation at the company. Until a year ago, all of Sentara's ITSM software ran in-house. At that time, Siegrist planned to upgrade to Hewlett-Packard Co.'s Service Manager 7, but instead of updating the software in-house, Sentara opted for the SaaS route and hasn't looked back.

Because he no longer has to install and maintain the new version of Service Manager Siegrist can assign staff to other tasks. "We've gained a full-time employee -- almost two --depending on how you slice the onion," Siegrist said. "There is still some level of maintenance, from a data perspective, but it's really minor in the grand scheme of things."

In Siegrist's View, a SaaS provider offers better support than an integrator that installs or updates systems management software. "With partner installs, they give you follow-on support for a little while," he said. "But there is a reasonable amount of turnover at those companies. If you call them back out, there's going to be a charge. If HP makes a change to the code and it breaks the tool, they're responsible for the fix."

Siegrist said the move to the SaaS-based Service Manager was no different from any other product upgrade. "You have to know what your customers need and expect, plan for it, communicate, and train. It's the same thing you would do if you were doing an internal upgrade."

His only issues with SaaS were the lack of customization and occasional performance hits. "When you own the software completely, you can turn dials and make tweaks," Siegrist said. "Although SaaS has been accommodating, there are times when we would have made adjustments"

"HP will tell you their Web interface isn't as fast as they would like," Siegrist said. "We have to wait 10 seconds at start uptime, but once the data is loaded, it's pretty smooth."

The Big Four: Offering SaaS without eroding cash cows
SaaS for service desk was nonexistent three years ago, according to David Coyle, a research vice president for IT operations at Stamford, Conn.-based Gartner Inc. But the arrival of SaaS-based ITSM startup and its ability to win customers pushed the Big Four to move.

"Service-now did very well, and because of their success and partly because the economy turned south, the Big Four took note and jumped on the bandwagon," Coyle said.

The challenge the Big Four have is that their solutions were never designed for SaaS.
David Coyle
research vice presidentGartner Inc.

"The challenge the Big Four have is that their solutions were never designed for SaaS. When you take software designed to be run on premise, it makes it really hard for the vendor to do upgrades, and they'll have performance problems. They can't take software developed decades ago and say it is SaaS. The technology and the architecture just aren't there."

Coyle said the Big Four and other vendors offer a range of IT management functions as a service, but ITSM and service desk are the easiest sale.

"Service desk has been used for a long time with a Web client, while a lot of other tools require a [full] desktop client," Coyle said. Service desk is a commoditized category, so many offerings are similar and the vendors continually play catch-up with one another, he said.

Big Four's on-demand moves
In January, BMC said it would offer its Remedy ITSM tool as a service. CA dipped its toe in the on-demand IT software market, mainly in project planning and asset management, and IBM Corp. offers Tivoli Live. HP's SaaS portfolio is arguably the broadest, much of which emanates from HP's 4-year-old Mercury Interactive acquisition.

Some of HP's on-demand offerings have on the market for 10 years, said Tim Van Ash, the director of SaaS Products at HP.

Software as a Service-based systems management tools are attractive because they place the burden of software installs and upgrades back on the vendor.

The vendor began with Business Availability Center and Performance Center for website and e-commerce monitoring, service-level management, and capacity testing for websites. Launched in 2000 by Mercury, the tool was built from the ground up for SaaS.

In 2005, Mercury introduced Product and Portfolio management as a Service as well as software quality center and test automation platforms. In 2007, HP (formerly Mercury) launched ITSM SaaS. And today HP even offers its configuration management database Software as a Service. Van Ash said the SaaS business has outpaced the license business in growth. "Customers can get up and running quickly on HP's SaaS products, much faster than they can install software internally," he said. "Some software can be migrated in days or a week. We can upgrade a customer to a current version of Service Manager in a month to six weeks by the time we test the systems."

A year and a half ago, CA started offering SaaS-based tools. Lokesh Jindal, CA's senior vice president, sees smaller companies and departments picking up on the SaaS model, thought SaaS has begun to penetrate larger companies as well.

"For large enterprises, the offering needs to be deeper, versus something lightweight, and tools that need more customization can't move to the SaaS model as quickly," Jindal said.

The more a large company needs to see into its internal infrastructure, the less suitable a full SaaS model is, Jindal said. For those implementations, a hybrid SaaS model, plus a virtual appliance that communicates with hosted software, could fit the bill.

Why SaaS with ITSM and service desk tools? 
The No. 1 reason IT managers move to SaaS-based IT Service Management and service desk is to save time on software installs. SaaS implementations can save companies four to eight weeks on an installation, Gartner's Coyle said.

The second reason is that SaaS can be bought and paid for from a company's operating budget, not as a harder-to-justify capital expenditure.

"Some organizations don't have capital spend because of the economy," Coyle said. "Others have it, but it's very difficult to spend it. I talked to one company that said that capital is so tight, anything over $100,000 needs to go before the capital review board and it takes nine months to get on their calendar."

But Coyle warns IT managers to keep an eye on security and costs. "Keeping information in someone else's data center is a major concern," Coyle said. "You also need to look at the total cost of ownership. SaaS is cheaper in year one, but what about years three through five? I could possibly be more expensive in the long run."

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