Opportunities and Challenges of SaaS in the Government Sector

Gary Gorson, CTO, Lake County

Gary Gorson, CTO, Lake County

The rapid transformation of software vendor business models to include, and often migrate entirely to, Software as a Service (Saas) has included products specific to the public sector. Along with generic offerings like Microsoft’s Office365, Oracle, and GIS offerings from ESRI, vendors with products like tax assessment/bill preparation, land permitting/surveying, and court case management and justice related systems are providing SaaS options in addition to their traditional on-premise deployment models.

Choosing between a SaaS deployment and a more tradition on-premise solution is not always straight-forward. And total cost of ownership (TCO) must always be kept in mind. Any analysis of SaaS vs on-premise should be done carefully to insure an “apples-to-apples” comparison. The cost of providing the same levels of services for an on-premise solution should be taken into account for any comparison.

The benefits, risks, and TCO need to be carefully considered, and often the forces at work in government arenas make that difficult to do.

Potential Opportunities:

• Remote access– A SaaS solution that is accessible via the internet can essentially be accessed from anywhere. This and mobile-friendly interfaces provide greater functionality for users in the field (surveyors, inspectors, assessors, etc.). Not having to access through the customer data center simplifies the environment by eliminating the need for connectivity-related solutions using VPN or VDI or any point-to-point connections.

• Compliance–Coding to security standards and housing equipment in compliant (PCI, HIPAA, etc.) data centers and conducting required annual audits is the responsibility of the vendor.

• Disaster recovery - Robust infrastructure and disaster recovery capabilities that reputable SaaS vendors provide can relieve the customer from having to develop and maintain resilient infrastructures on their own to meet similar SLAs.

• Enforcing standards and business processes – Especially when dealing with multi-tenant applications like Office 365 where customizations and departures from upgrade paths are not optional, the SaaS arrangement effectively forces departments to comply with version upgrade timelines, keeping all users within an organization on the same version of software. This makes the local support team’s job easier than having to support multiple versions of the same software.

• 24/7 support– Support for a SaaS implementation has the staffing bandwidth, processes, and service desk systems in place to provide round the clock support. Leveraging those resources across multiple clients makes that kind of service level affordable to budget-squeezed government entities. The cost of providing the same level of support internally would almost always be prohibitive.

• Staff savings – Being able to access a SaaS implementation from anywhere enables employees to work from any location with a connection to the internet (remote offices, home, even the local Starbuck’s). This capability also can be an important feature when planning for business continuity in the event that a normal work location becomes inaccessible as a result of a disaster scenario. A SaaS deployment eliminates the need to manage some hardware resources on site. Besides simplifying the infrastructure, reducing capital costs, there will be the opportunity to reduce office space, redeploy personnel, and/or eliminate positions.

• Enhanced security–Vendors who offer SaaS solutions usually have security experts on hand and maintain more secure data centers and overall computing environments that most corporate or government entities care to, or can afford to, maintain.

• Faster to implement –Since the vendor already has the infrastructure in place and presumably has implemented several client systems it is a matter of configuring, and in some instances customizing, the application and environment for a new client. Additionally, the hardware and software support teams and processes are already in place and operating for other clients so there is no need to add and train staff or develop and test those support processes.

Challenges/Risks Need to be Analyzed Alongside Any Potential Benefits a SaaS Solution Might Offer:

• “Forced” upgrades – Many SaaS applications, especially multi-tenant models, dictate a strict upgrade policy to users. Having to accept updates without options to delay can be a training and communication challenge.

• Limited customization – The ability to customize a SaaS application can be very expensive, very limited, or even not possible (the case in multi-tenant environments). Again, it is too costly for a vendor to maintain several highly-customized applications and deployment environments.

• The “jump” in cost even though offset by feature expansion can cause financing/cashflow challenges – For organizations that have limited capability in their budgeting and approval processes to spread costs over multiple years, accepting that ROI might not occur for several years after implementation of a SaaS system might be impossible.

• Data outside the organization–SaaS solutions by their very nature require that an organization’s data is stored outside of the organization’s data center. While some individuals may be uncomfortable with this notion, often times the vendor has dedicated security experts beyond what is cost-effective for a government organization to employ focused on keeping customers’ data safe. The vendor’s business relies on tight security and recoverability, and they have made investments in secure, redundant infrastructures and supporting procedures that might be beyond the financial capability of the typical government entity. 

• Staff impact–A SaaS solution often results in the elimination of infrastructure components like server and storage, and may also eliminate the need for support by in-house staff. Difficult decisions regarding position elimination and/or redeployment and reorganization may need to be made in order to realize the full business value (ROI) of a SaaS solution.

• Interfacing–In introducing a SaaS solution into an environment where several on-premise systems are interfaced to each other, one must pay attention to the performance impact and complexity/cost of developing and maintaining interfaces between those in-house systems and the SaaS application.

• Connectivity– Additional bandwidth and redundant internet connections may be needed to provide acceptable levels of performance when applications are moved into the cloud. These needs should be carefully analyzed before committing to any SaaS solution. Multiple internet connections of acceptable capacity obtained from multiple vendors that enter facilities at different locations may not always be available. In such cases there is an increased risk of total system failure in the event that user load is greater than predicted or if an event occurs that physically severs a connection.

When faced with a choice between a SaaS and an on-premise decision, the chance to examine and improve current business practices and policies outside of IT (budgeting, purchasing, staffing, training, and others) is both an opportunity and a challenge –with the potential to improve efficiency, reduce costs, and provide higher quality services to all stakeholders. The organization needs to understand that deploying a SaaS solution involves shifting risks and, if done properly, not taking on more risk. Generally this means the shifting of risks away from in-house support resources, which are limited in comparison to those that SaaS vendors can bring to bear; and taking on the risks associated with maintaining robust network connections and internet services.  

Read Also

The Innovation of Digital Transformation

Michael Mayta, CIO, City of Wichita

Employer of Choice

Bill Hunter, CGCIO, Director, Communications and Information Technology, County of Roanoke, VA

Our Biggest Problem

Laura Fucci, CIO, City of Henderson

Transformation Journey in Illinois

Mike Wons, CTO, State of Illinois