Report shows increase in outsourcing of SaaS management

A growing number of organizations are not only using software-as-a-service (SaaS) apps—they’re asking for help with them.

The complexity of SaaS applications like Salesforce, Workday, or Office 365—and their essential role to the business for functions like sales, HR, and writing, respectively—has led to an increase in outsourcing tasks to partners with expertise.

A survey from Avasant Research found that about half of 146 IT organizations outsourced their application management functions in 2021—a jump from about one-third of respondents in previous years.

“Every enterprise software product today is being released as SaaS. There’s nobody that’s building new, on-premises systems anymore. Nobody,” said Frank Scavo, president of Avasant Research. “So, as you [implement] that, then the need for application management becomes greater.”

Gartner predicts that almost two-thirds (65.9%) of spending on application software will be directed toward cloud technologies in 2025.

What’s being outsourced? Large partners like Deloitte, Accenture, and PwC, as well as smaller, specialized firms, support a number of SaaS-specific tasks, from customized application development to help-desk support and ongoing testing.

Customization. A SaaS provider like Salesforce has come a long way from its 1999 days—now its cloud-based CRM has developer tools that enable add-ons.

“You’re seeing a lot more of that now, where companies are taking the base SaaS product—whether it be Workday, Salesforce, [or] NetSuite—and they’re building significant applications on top of it,” said Scavo.

A company using Salesforce, for example, may want to create a unique way of purchasing and tracking, which requires specialized fields, page layouts, and validation rules.

If there’s a problem with custom code, an application-management services provider can apply changes, Scavo added.

Orchestration. With a low barrier of entry—you can still buy plenty of SaaS applications with a credit card—companies are acquiring IT faster than they can manage it, said Seth Robinson, VP for industry research, at CompTIA.

“Procuring those individual cloud computing components probably doesn’t require a lot of technical expertise, so you can get yourself into the situation where you’ve created a much more complex architecture than you can manage yourself,” Robinson told IT Brew.

With programming technology, cloud orchestration manages and offers analysis on the many cloud workloads in an infrastructure. Companies can look to third party-managed service providers for cloud orchestration to monitor “SaaS sprawl” and to understand cost and utilization.

Some advice.While it may be tempting to outsource the SaaS, you likely don’t want to hand off your core competency, according to Liz Herbert, VP and principal analyst at Forrester. Find a partner that offers services that align with your business goals.

“You might say, ‘You know what, for my organization, the way that we hire is a huge part of who we are. So, a lot more of the work related to our HR systems, we want control of—maybe not something like testing them, but maybe a lot more of the design and configuration and setup, because that’s something really differentiating for us,’” said Herbert.—BH

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