Deploying public-sector IT projects these days can be trickier than it used to be. The recession threatens to downsize staff resources that CIOs need to run operations smoothly. Some finance directors are praying federal stimulus money will lift their budgets out of the abyss, but there's no guarantee that will happen. It's no wonder IT managers want to improve technology while keeping costs down.

More of them are trying a Web-based solution known as software as a service (SaaS) to rent the tools their employees need, when they need them.

With the SaaS model, vendors provide software over the Internet to paying subscribers who would otherwise buy out-of-the-box applications and install them on their own servers. In most cases, SaaS vendors house the applications on their servers and handle maintenance and security, freeing government agencies' of the burdensome managerial duties.

"For purposes of state, local and federal budgets, it's actually a very good model because it's controllable cost. You're paying 'X' dollars per user -- or whatever deal you have -- per month, quarter or annually. It's controllable cost that is consistent over time," said Paul Greenberg, a customer relationship management (CRM) expert who is co-chairman of Rutgers University's CRM Research Center and the executive vice president of the CRM Association.

On the Rise

When Greenberg speaks about SaaS's attractiveness, he's not alone. Legions of organizations have jumped on the SaaS bandwagon, and the number of users continues to grow.

IDC analysts project that 76 percent of American public and private organizations will use at least one SaaS-delivered application in 2009. The firm, which anticipates SaaS adoption will grow as much as 40 percent this year, said 23 percent of U.S. businesses spent at least a quarter of their IT budgets on SaaS applications in 2008. That number could reach nearly 45 percent of U.S. firms by 2010.

Saideep Raj, managing director of Accenture's global SaaS practice, said he and co-workers have noticed SaaS use growing in the private sector.

"What I'm seeing out in the market is that software as a service is increasing in terms of its adoption at enterprise-level organizations," he said. "I think, for many years, software as a service has been pervasive in the kind of midmarket space. But over at least these last two to three years, we've been seeing increasing take-up in larger organizations."

For instance, New Jersey Transit turned to SaaS when it needed a new way to handle customer-service inquiries. The organization manages statewide bus, rail and light rail operations over a more than 5,000-square-mile area, and fields thousands of citizen complaints, compliments and comments. But only a relatively small number of employees could access it old customer-information system, which didn't track all of the required case information. The organization needed an enterprise system overhaul.

"We have locations throughout the state, whether they're bus garages, rail facilities, maintenance facilities, that sort of thing. We needed to be able to set something up so that users across the state can log in easily, quickly and without software installations on their PCs," said Tim Wierzbicki, manager of customer service performance analysis for the agency.

The agency also needed to save money in the process.

"Our CRM utility has to touch almost every area of the agency, so when we were looking to do the initial upgrade, we had to find something that was a: cost-effective, and b: didn't require infrastructure," he said. "We didn't have the funds to invest in servers and to set up users because we have locations throughout the state."

The Illinois Department

Hilton Collins, Staff Writer Hilton Collins  |  GT Staff Writer

By day, Hilton Collins is a staff writer for Government Technology and Emergency Management magazines who covers sustainability, cybersecurity and disaster management issues. By night, he’s a sci-fi/fantasy fanatic, and if he had to choose between comic books, movies, TV shows and novels, he’d have a brain aneurysm. He can be reached at hcollins@govtech.com and on @hiltoncollins on Twitter.