Here at SuccessFactors we’re obsessed about driving real impact on companies top and bottom line from smart usage of SuccessFactors. SF Research is all about researching, quantifying and sharing leading practice for this. In this guest post from Chris Thorman at SoftwareAdvice you can read about how companies can save some green for themselves all while going greener in their IT spend.

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In case you haven’t heard (or aren’t obsessively following IT trends like we are), the great trend in software is the evolution from traditional “on-premises” software (e.g. client/server software installed at the office) to Software as a Service (SaaS) (i.e. web-based applications that are managed in the vendors’ data center and accessed “on-demand” through a web browser).

Given what’s at stake for software companies in either camp, debating the merits of each model has led to some fiery discourse. We thought we’d fan the flames by introducing another angle: which model is “greener;” that is, better for the environment. We used electronic medical record software as the comparison example.

We crunched the numbers for each type of software. Here are the quick stats on power consumption of each software delivery method:

On-premises

Total energy consumption by four physicians: 9,408 KW/yr

Individual energy consumption by each physician: 2,352 KW/yr

SaaS

Total energy consumption by four physicians: 611.4 KW/yr

Individual energy consumption by each physician:  152.85 KW/yr

For an even quicker summary, the SaaS software used 93% less energy than on-premise. That is a massive energy savings that if scaled to a large number, has world wide effects on energy consumption.

Recently Saugatuck Technologies released a study showing that SaaS (Software-as-a-Service) Human Capital Management software contributes at least 2-3% to top line growth – definitely good news for companies seeking more green. An article in this week’s San Francisco Chronicle made me start to think about another kind of green – the environment. Human capital management is key to driving a number of environmental initiatives. Paperless reviews save paper. Working from home reduces gas-guzzling commutes and slows the need to build new office space, and as the San Francisco Chronicle points out, employees love working from home. As an important part of the individual value proposition to the employee, working from home helps keep your employees engaged.

But, successfully promoting a paperless office and shifting people from the office to the home, requires systems that support these activities. Goal alignment, ensuring that people are working on the right things for the right reasons, is very important. People need to feel like part of the team, even if they aren’t physically present. Traction, not action is the mantra for successful execution. Goal alignment ensures that people are moving in the right direction downfield to score, and not just gaining yardage. In fact, if your players are moving in the wrong direction, they are moving farther away from the goal. Goal alignment helps ensure that this doesn’t happen. It is not a substitute for supervision from a manager, but keeps the team working toward the overall company strategy.

Human Capital Management is a critical to earning green, and going green, enabling people to work from home, in global teams, anywhere, anytime. How green is your organization?

Cost, talent, or innovation – which of these three challenges will drive Human Capital Management decisions in the future? The answer is easy: all of them. The question of how to address these drivers is a far more strategic and important question. Charles Grantham, co-author of Corporate Agility, recently joined us to speak with our customers about coming challenges that businesses face due to dramatic shifts in how, where and by whom work is done – a major focus of his recent book and the research he and Jim Ware from the Future of Work are doing. In his presentation, he described 9 strategies for addressing the challenges.

After reading this and engaging in discussions with Charlie, it became apparent that we actually help our customers execute on several of these strategies. We do this in a unique way, enabled by our delivery model and the focus of the product suite in terms of what it actually does for people.

For example, many people think of investing in on-demand solutions as an outsourcing strategy – moving administration away from the core business. But a better way to look at our model is to think of it as an INSOURCING strategy, the customer is INSOURCING a best-in-class and ever improving process. Of course, it is very powerful to let someone else do non-strategic activities faster and cheaper for you. But when you truly INSOURCE, you get the best of two worlds: it is someone else’s core business to figure out the best way to do things, and constantly improve it for you, while also being very cost efficient. That cost efficiency is of course a mutual win for INSOURCE providers and customers.

Effective human capital management processes are critical to INSOURCE. Why? Facilitating teamwork and collaboration is critical for innovation. Finding high potentials, developing their skills, and adapting to the new workplace is critical to closing the talent gap. People are the largest variable cost for most businesses (70%), optimizing their performance is critical to reducing costs. The revolution of on-demand software delivery with the SaaS model enables this phenomenon of being able to INSOURCE strategic processes that support your business’s strategy execution.

If you’re still debating the merits of Software as a Service there’s an article from The Economist you should read. It’s not about SuccessFactors (though it could be) it’s about Google. Why is an article about Google relevant to SuccessFactors? Well, because they provide their offerings as a service, and so do we. Thus, many of the benefits of the approach are the same:

6 lessons about SaaS using quotes from the article:

1. “Most employees already know how to use web-based software, and thus do not need training. “ Any new application takes some time to get familiar with, but when users are used to the web, they have a tremendous head start with SaaS applications.

2. “They can access the services through any web browser, regardless of what kind of computer (or telephone) they use.” Ummm. Yes. No software to install on every PC. Works with any system anywhere in the world.

3. “And in-house IT staff need do absolutely nothing, since the data and software reside on Google’s server computers.” IT’s opinion will always count, but it’s not another system they have to install, update, secure and maintain.

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A post over at Vendorprisey (with a very clever title) got me thinking about Software as a Service (SaaS) again. So often, conversations about SaaS involve an argument about what is and what is not considered SaaS. 

To a certain extent these discussions can be helpful -helping to classify different solutions into categories that imply certain attributes and benefits. But to regular folks, the nomenclature is irrelevant – it’s the benefits that matter.

It made me consider how to uncover the benefits amidst all the technology talk. So here’s a first attempt at some simple questions any layperson can ask to make sure they get the most our of a technology solution. If you have any suggestions – shout ‘em out. 

1. Who manages the technology infrastructure?
If it’s your company, then you’ll be responsible for ensuring the system is available and speedy, functioning correctly, secure, up-to-date, scalable and integrated. If its your vendor, all that becomes their concern – and you can focus purely on results.

2. How do updates and enhancements get made and how often?
Good software is like a living thing. It should grow and get stronger and more capable over time. When your vendor updates the system or enhances it with new capabilities – every customer should get the benefits and have the option to take advantage. The second part is the frequency of updates – in general, more is better. You want your vendor to be constantly improving what they deliver to you and you want to be able to take advantage of it way more often than 1 time per year.

3. Who is making the system work the way it needs to?
This gets at the “customization vs. configurability” issue.  If the answer is a software engineer or programmer it means you are going the customization route. Software code has to be written or edited to get the system to work the right way. This is a big red flag. I’ll explain in a minute. If the answer is a domain expert (in our case, an HR practitioner) – you’re in better shape. It means your solution is being configured to suit your needs from a huge menu of available options.

Why is configured better than customized? The result may be the same – a system that supports your processes the way you want it to – but the devil, as always, is in the details. With a customized solution – you’re on your own. You’ve got a unique bit of software that’ll have its own quirks – so when it comes to supporting, updating and maintaining it – there are unique challenges every time. With a configured solution, everyone is working from the same core – even though every customer’s solution is completely different..

4. Is this about technology or business results? 
If it’s clear that the planning for your roll out is all about the technology – what servers, what installation, what integration, etc – then you’re going to end up solving a technology problem, not a business problem. Finding a partner that can help you focus on the business results of your efforts is the only way to achieve your business goals.

Another post from a few days back on SystematicHR (I just can’t keep up with the guy) in which Dubs hopes that the future of SaaS is a world in which vendors can use abstracted data from their systems to help customers learn what’s working and what’s not for others in their business / industry. After all, across millions of users and hundreds of companies one could imagine all kinds of delicious data that, in anonymous and abstract ways, could be used to identify trends, successes and failures across all kinds of situations.

In fact, this has been the holy grail of such systems for years. Today, such data comes from surveys. But if one could get data directly from what companies are doing, as opposed to what they are saying, how much more accurate and powerful would it be? We think a lot. That’s why were already doing it. We think it’s a huge value to our customers – and one of the ways we’re helping to drive customer success.

Erik took a moment to reply to Dubs’ post. Here’s part of what he said: “We are looking at aggregate data from that enormous resource of ours. To look at what works and not we use publicly available financial information and cross reference those two. The findings we make are very interesting and are being used to further push our thinking of leading practice in different areas.”

You can read more about SuccessFactors research here. And if you have questions for Erik, just email him.

A Note: this post was written by a guest writer, and does not necessarily represent my opinion. That said, I think it’s important to host a variety of thoughts and perspectives on the blog and thus, I give you the following article written by Lars Dalgaard, the CEO of SuccessFactors. As always, please feel free to comment.

As an outsider that moved into the software industry five years ago, I’ve been amazed to watch the wild mood swings that take place due to over-hyped and over-marketed technology trends – which every vendor seems to chase loudly in pursuit of “the next big thing.”

Of course, customers in the real world are more focused on “what’s now” rather than “what’s next.” And yet they have to wade through reams of white papers, data sheets and web site content to figure out whose software actually does what – and then hope the promised features actually migrated from the press release commentary into the real product code.

The same type of real-world sanity check can tell you whether a technology trend is here to stay or hyped to decay. A good litmus test is whether it’s vendor-driven or customer-driven.

It’s exactly this test that I believe can sort through the hot topic du jour: software-as-a-service. Admittedly the topic has been heavily hyped by Silicon Valley types looking to drive big multiples. And now that some of those high-profile players have experienced some hiccups, the naysayers are working overtime to call the whole idea into question. Scare tactics and “what if” scenarios abound to push people back into their comfort zones.

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My favorite SaaS blogger, Phil Wainewright, has a great post from last week about the real benefit of SaaS: It lets everyone focus on results.

He puts it better than I could:

Now, for the first time since that wrong turn the software vendors made all those years ago, on-demand applications are putting business results back into focus. The vendor has already done the implementation before even meeting the customer. The technology is already sorted, and the vendor guarantees to keep it working. What matters is whether the application meets the customer’s business need. The whole conversation revolves around what the customer is trying to achieve, and whether the application can help with that.

Well, isn’t that really what software is meant for in the first place? To get results? It seems quite obvious, but most of our experiences tell us it’s all too rare.

The point he doesn’t make is that we can get to results way faster with SaaS than any traditional software implementation. We don’t need to spend a ton of time or money or effort on the software itself, so we’re free to spend all of our resources pursuing our goals.

It’s kind of like if we had to build a car every time we wanted to go somewhere new. That would clearly be a lot of work. SaaS is like having a car delivered to your door. You still have to drive it to your destination, but don’t have to worry about whether or not (or even how) the car itself works.

David Berlind on the ‘Between the Lines’ blog at ZDNet tells of the unique pleasure of sitting next to SuccessFactors’ own Marty Pitkow (pictured) on an airplane the other day. And believe it or not, Marty helped him experience a SaaS epiphany.

How, you might ask? Well as it turns out, David was on the way back from the Gartner Symposium where one analyst recommended (link to another ZdNet article) that it was time for companies to “not own, but rent” applications – among some other visionary proclamations. And so David had SaaS on the brain – but talking to Marty drove the point home.

Perhaps not surprisingly, I agree with David’s conclusion – that SaaS is ultimately a no brainer. Here’s an excerpt:

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That’s right. A break. I’m off on vacation for a week. A whole week.  But don’t worry. I’m not going to leave you without things to think about. In my absence, I refer you to the following blogs to keep the mind moving and the ideas coming.

SystematicHR – A comprehensive and compelling blog centered on HR technology but free roaming around all sorts of issues that affect HR practitioners. One of the best around, period – from a guy who knows what he’s talking about. 

HR’s Brand New Experience – Regina covers some of the softer issues in HR, with consistently insightful stuff that has you clicking the subscribe button about 2 seconds after the site loads in your browser.

The Human Capitalist – Jason Corsello of The Yankee Group is one of the most respected analysts in the space. This is his personal blog, so you can find pictures of his dog alongside thoughts penned by one of the guys finding clarity in the ever-changing and sometimes confusing world of performance and talent management.

Software as Services – An unabashed advocate of SaaS, Phil Wainewright highlights some of the obvious (and not so obvious) things to know about Software as a Service and notes the hottest news in the space.

Presentation Zen – We all have to do them, so why not spend some time thinking about new ways of making your stuff pop! Presentation Zen inspires and focuses as it entertains.

Bona tempora volvantur by Guy Kawasaki – After just a few months blogging, he’s already considered one of the most popular bloggers around. The well known venture investor and author brings fresh ideas and perspectives to all kinds of business and workplace issues with his trademark writing style and incisive wit.

You can also take a click-walk through the blogroll on the right, mess around with the poll on the left, and don’t forget the archives. Have a great week!

Enjoy, and I’ll see you soon,
Max