Last week, SpendMatters master Jason Busch held up an article on Software as a Service (SaaS) by CMP Media’s Shyamanuja Das as evidence of the type of thought-provoking analysis old-school business-to-business trade publications will need to adopt to remain viable. Writes Jason: “From the start, I like the attitude and style of the author, as well as punchy background on what SaaS actually is.”

After reading Das’ article, I must admit, it is an improvement over many trade articles. (And I’m all for attitude and style.) If you’re looking for a basic primer on SaaS, it’s worth a read.

However, like many business articles — particularly those in IT pubs — it misses the mark on SaaS. The article ignores (possibly intentionally) the fact that enterprises and analyst firms got savvy to a long time ago: the center of power for enterprise application decisions has shifted from the CIO to the line-of-business executives. And SaaS is designed to address this power shift.

As stated in previous Supply Excellence posts, On Demand or SaaS is about delivering application functionality, content, and services as integrated Web-based services that can rapidly drive required business process improvements without the risks, resources, and burdens of traditional installed software. It also allows for lower total-cost-of-ownership and perpetual innovation without the need for ongoing software and hardwarde maintenance.

Instead, Das focuses on the implications SaaS may have on the IT organization. His article reads more like a treatise for the protection of endangered IT executive, rather than a SaaS expose. The closest the article comes to addressing the business value of SaaS is a passing thought on the financial benefits of the model: “For the CFO, the whole proposition can be summarized in a simple sentence — SaaS is about turning yet another capital expense to an operating expense. And that translates into not just better balance sheets but also lower risk.”

For a true examination of the business value of SaaS, I recommend that Supply Excellence readers check out the new Building SaaS blog from John Martin, SVP of strategy and technology at a leading provider of services procurement solutions. I have had the good fortune of knowing John for several years, and cannot think of a better SaaS evangelist. John is an intellectual with a unique blend of IT know-how and business savvy. (It must have somethign to do with the combination of his engineering and computer science degrees from MIT and his Stanford MBA.) He is also an experienced veteran, having served terms in the largest consulting and software companies in the world as well as several software start-ups. This pedigree gives John a unique voice of authority when it comes to discussing how SaaS is the intersection of IT and business.

Here are some of my favorites of John’s posts:

• The Business Value of SaaS: “Buyers care most about the effect that the whole program has on the newly-automated business process — cost savings, process speed and accuracy and visibility, better process results — which includes far more than the software functionality. SaaS providers, since they derive revenue from system adoption, usage volume and customer retention, provide everything needed to be successful with the software — configuration services, change management assistance, system integration creation, and best practices to ensure that the customer gains the benefits from automating the busienss process.”
• The SaaS Customer Ownership Experience: “SaaS providers…have to earn their customers on a continuous basis, since customer usage and adoption determines the SaaS provider’s revenue.  SaaS vendors actually help customers increase usage and adoption. Since the customer can leave at any time, the SaaS vendor must continuously work to keep them happy with the software’s functionality, value, availability, performance, support, and overall business value.”
• SaaS Innovation: ”By contrast, SaaS software companies increase revenue through increased usage and adoption of their solution. So SaaS vendors focus their energies on increasing customer adoption, satisfaction and expansion, through innovating in areas that increase value and reduce costs for their business customers: speeding up implementation; improving the user experience; integrating more easily with customer systems; increasing functionality in ways that will increase usage; and providing more insights to the customer into the value and performance of the automated process.”

Whether you prefer staid, old-school media coverage or new-age blog thinking, one thing is certain: the increase in coverage suggests that On Demand and SaaS are fast becoming an accepted and even preferable mode for enterprise application delivery. The reason is best summed up by John: “The business value derived from a software-automated business process depends on the process design and operational execution, and SaaS enables implementing an automated process and operating it well far better, from a business-factor point of view, than on-premise software.”