There are many factors to consider before fully adopting this software solution for your business.

If you’ve looked into acquiring a new learning management system (LMS), virtual classroom, or web conferencing tool recently, you’ve likely encountered a new acronym: SaaS, which stands for Software-as-a-Service.

It is reported to be the fastest growing area of enterprise. Gartner, a software technology research and advisory company, defines SaaS as software that is owned, delivered, and managed remotely by one or more providers. The model is gaining popularity in areas such as compliance, risk management, office administration, sales and service automation, and procurement optimization. But is this model suitable for learning and talent management applications?

According to Gartner, the answer is a resounding yes. The analyst firm reports that SaaS adoption is close to 70 percent in e-learning and web conferencing. The Bersin & Associates report “Learning Management Systems 2008: Facts, Practical Analysis, Trends, and Vendor Profiles” concurs with Gartner’s findings. The study reports that outsourced and SaaS solutions are in strong demand because of lower operational costs and faster implementations. Of companies that recently purchased an LMS, 61 percent chose either hosted or completely outsourced solutions.


Companies are looking for business solutions that are easy to use, easy to deploy, and are cost effective to assist them in improving their bottom line. The SumTotal Systems white paper “SaaS in Learning and Talent Management Software,” contends that SaaS promises to meet each of those requirements.

Reduced costs. SaaS deployment models avoid software application and technology infrastructure acquisition costs, including large investments in software licenses, server and network hardware, and dedicated support personnel required for a behind-thefirewall platform. For example, typical learning solution platforms must scale to peak capacity levels based on usage trends and forecasted requirements, with availability managed on a 24/7 standard. But SaaS solutions provide these service levels without such limitations, and they generally leverage a technical staff that monitors and manages the solutions of multiple customers on a shared basis.

Rapid deployment. SaaS offerings typically have much shorter implementation cycles. First, procurement processes often are simpler. Because behind-thefirewall implementations can be expensive, getting buy-in for such projects requires a greater degree of consensus building throughout your organization. SaaS offerings also require little if any capital investment, and often can be procured entirely through the training or HR organization. In addition, SaaS offerings have no software or hardware to install and set up. Finally, supplier services and training engagements also can be less involved because they’re built into the service agreement.

Automated upgrades. With SaaS, technology obsolescence risk is shifted to the supplier, including responsibility for maintaining platform components to comply with evolving security and operating standards for web-based applications. As a result, customers can limit their upfront investment, as well as their exposure to risks associated with managing technology. In addition, organizations can avoid costly periodic upgrades to the technology. These upgrades, which can occur on an 18-month cycle, are required to maintain each of the applications supporting the customer’s learning solution. Challenges SaaS deployments offer plenty of advantages, but SumTotal Systems advises buyers that there are factors to consider before writing off other deployment models.

Security. Data security can become a major stumbling block in the adoption of a SaaS model because information related to learning and talent management, such as training-compliance data, is usually confidential. Fortunately security measures have evolved to meet the needs of most organizations. Be sure to evaluate whether your solution would have a shared database. In addition, you may want to have the supplier provide documentation about its physical and network security.

Reliability. When opting for a SaaS solution, the customer agrees to depend on others outside the organization to keep the system up-and-running. Have an information-technology specialist from your organization help evaluate the hosting environment, its network architecture, and disaster-recovery plans.

Customization. The SaaS model is not conducive to customizing the software’s code to modify functionality. Be sure to evaluate how you can configure the software to map to your processes before you purchase an agreement.

Scalability. Most organizations are looking for ways to extend their enterprise users’ communities to include channel partner, supply-chain members, and customers. Check whether the SaaS solution has a reasonable upgrade path should you prefer a different deployment model.

Integration. Learning systems typically need to integrate seamlessly with other performance-management systems. Make sure your provider has the tools to support integration.

Best practices

A best practice SaaS provider should include the following characteristics:

Solution-centric. The SaaS platform must provide access and management of an integrated set of applications that support learning and content management workflow. Additionally, a SaaS provider should be able to host or integrate commercially available third-party software (for example, Livelink, Questionmark, and WebEx), as well as web-based content that delivers a customer’s entire learning solution.

Centrally managed. SaaS platform services should be managed from a central location, allowing customers to access their hosted learning solution remotely over the Internet or via a dedicated network connection globally. Unlike with other behind-thefirewall platforms, the SaaS provider manages network bandwidth, desktop configuration, and general help desk support requirements.

One-to-many service. SaaS platform services should be designed as a oneto- many offering. In this manner, customers benefit from economies of scale and related investments made by the supplier.


Defined service level agreements (SLAs). SaaS solutions are best managed through defined SLAs that leverage standardized support processes based on best practices. In many organizations, behindthe- firewall platforms can suffer from inadequate support levels or lack of accountability to manage to a defined standard. Critical SLA requirements should cover issue response and resolution standards, including timely escalation and effective troubleshooting of priority issues. The SLA also should define application development quality standards such as defect containment for enhancements and required modifications.

Delivering on the contract. The supplier is responsible for delivering on the customer contract, ensuring that all SaaS solution services are provided as promised under SLA. Although a third party may provide hosting infrastructure and support services, your main partner is responsible for resolving all issues. A customer should be able to rely on a single partner to manage all components of its hosted learning solution, including related integration requirements.

Support services. Look for a partner who has developed and operates certain key strategic technology components while integrating other nonstrategic components available from third-party suppliers. Integrated components may include applications such as knowledge management and collaboration solutions, assessment tools, virtual classroom, web conferencing, and dashboards.

Bottom line

According to Learning Circuits author Thomas Laubenthal, business enterprises, medium to large, that have the following characteristics are typically the best candidates for an SaaS learning solution:

  • the need to leverage technology to support the development, delivery, and management of learning to drive workflow productivity
  • the need to scale technology to serve large or extended user communities.
  • the need to adopt a technology solution strategy, integrating and managing required components as a single platform to deliver a comprehensive service.

Customers who meet these qualifications and pursue a best practice SaaS provider can expect significant cost savings (compared to total cost of ownership for behind-the-firewall solutions), higher contracted service levels for comprehensive operational support, and a single point of accountability.

Top 10 SaaS Traps

ComputerWorld advises buyers to watch out for these hidden snags when opting for a SaaS solution.

1. “I agree” to what? Poorly informed organizations can run a significant risk of having business leaders agree to software terms they’re not familiar with.

2. Easy installment plans. Few customers realize that they can pare their yearly costs by 5 percent to 15 percent if they pay for an annual SaaS agreement all at once.

3. Missing SLAs. Not all suppliers provide SLAs with the contract, and some charge extra fees for SLAs.

4. Performance levels. Before entering into an agreement with a SaaS provider, customers should ask the supplier for a record of past performance levels.

5. Defining uptime. SaaS customers need to carefully define guarantees around system performance. For example, will the service be down eight hours a month for maintenance?

6. Add-on costs. SaaS customers should scour the fine print for hidden expenses. Suppliers can charge to configure the software or implement the database.

7. Integration intangibles. If SaaS software needs to be integrated with other enterprise systems, buyers need to determine who’s responsible for handling the systems integration and at what cost.

8. Data rights. Before entering into SaaS agreements, customers should determine where their proprietary data will reside and what rights they have to access that data.

9. Non-negotiable? One of the biggest misconceptions about SaaS agreements is that they aren’t open to negotiation. The supplier essentially bundles maintenance and support costs into the contract, so it makes sense to try to negotiate the deal down.

10. Exit charges. Make sure there are no fees if your organization has signed a one-year contract for 1,000 seats but wants out of the deal after nine months.