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SaaS in Public-Sector IT -- Part One of Two

New Jersey Transit and the Illinois Department of Natural Resources use software as a service to meet CRM needs and better serve the public.

by / June 30, 2009

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

of Natural Resources (IDNR) had a similar need: a low-cost way to deploy CRM sans laborious and time-consuming installation hassles. According to J. J. Pohlman, director of Office Administration, the Illinois IT landscape a few years ago made SaaS an attractive option.

"The state of Illinois was going through some major reorganization efforts as it relates to IT support," Pohlman said. "It was centralizing into a central management services area, so I was losing some of my support capabilities as an agency."

The IDNR needed a CRM tool to communicate with partners who were helping the department build the World Shooting and Recreation Complex in Sparta, Ill., which has more than 100 trap-shooting fields and houses numerous vendors that sell and repair shotguns. The agency also needed a way to contact and manage the information of gun manufacturers and other companies involved in hunting and shooting sports.

Pay as You Go

Both New Jersey Transit and the IDNR opted for SaaS so they could subscribe to what they needed and save on upfront deployment pricing.

"I didn't have to go through the development process. It was already a developed product," Pohlman said. "It did everything that I wanted it to do. I didn't have to support it afterward."

Ditto for Wierzbicki, who's relieved that he can benefit from upgrades and support for his SaaS solution without expending the internal manpower needed to maintain an onsite application.

"With traditional software, there's always -- you buy a package, you install it on the computer, and then, when a new version comes out or a new upgrade comes out, often, you have to buy that and then install that as well," he said.

In New Jersey's case, the new CRM tool vastly improved the jurisdiction's productivity. In 2004, before SaaS, the transit authority handled about 8,300 cases in Wierzbicki's estimation. It handled nearly 60,000 cases in 2008 with SaaS -- all with the same number of staff. According to Wierzbicki, this production boon comes from the streamlined, unified customer-information system.

"[Before the deployment], inquiries would get handled twice, three times, four times, and a customer could get multiple responses. And unfortunately, sometimes different responses to the same questions, so we needed to find a way to streamline that and to make sure that we eliminated the duplication," Wierzbicki said.

Both he and Pohlman chose solutions from, a prominent SaaS CRM provider. Pohlman said the IDNR pays less than $10,000 a year for its SaaS solution that's used by fewer than 10 people. Wierzbicki, who wouldn't disclose specific amounts, said New Jersey Transit pays an annual fee for 200 users.

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Hilton Collins

Hilton Collins is a former staff writer for Government Technology and Emergency Management magazines.

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