CRM tools are coming on strong in the SaaS world, too, with names such as Saleforce.com (for automating sales team management) and RightNow Technologies (for automating support department workflow).

Some of these companies provide the software only in the SaaS model, while some provide both installed licensed and SaaS versions of their software. Companies that provide both versions enable early rollouts of the software. In this approach, the customer can begin using software on the hosted site to determine its value. The company then can decide whether or not to install it at its site.. This provides maximum flexibility and provides some level of disaster recovery since you know you can host the software with the vendor if your local site goes down.

Safety First
There are several questions and sets of questions to ask to ensure that you’re dealing with a reputable SaaS firm that won’t lose your data or go out of business.

The first is to evaluate how well the vendor has integrated its service operations into its core business.

Many software vendors are experimenting with the SaaS model. But it can be an operational change that is inconsistent with the existing culture as a software product provider. Sometimes the way the personnel deliver the service is not well-developed or even agreed upon internally. Try to get a clear understanding of the prospective vendor's internal operational commitment to a SaaS delivery model. The value proposition of having the same company build and manage software will be of no value if that sentiment is not accepted and demonstrated across its operations.

• Is the software producer hosting the software for you or have they outsourced that to a completely separate company that basically acts like a reseller? If they are not hosting the software themselves they are less likely to make improvements that enable the SaaS model to appropriately evolve.

• How many clients do they have on the SaaS solution today? What percentage of their business is it? Can you talk to a few of those clients?

• Where is the computer that will be used to serve your application?

• Is the data center where that computer is located staffed 24 hours a day, seven days a week? What staff is on-site?

• What physical security measures are in the data center?

• Is there redundant power? If so, what is it?

• What cooling and fire suppression systems are available?

• From how many Internet service providers (ISPs) do they buy connectivity?

• Do they have a disaster recovery plan if your data center becomes unavailable?

• Are servers dedicated to each customer, or do multiple customers share a single server? The latter situation, called multi-tenant installation, is more scalable.

• What data do they back up and how often? How long do they keep backups? Do they store backups off-site?

If you ask these questions, it will go along way to ensure success. Compare the answers to those you get from your own IT staff. Small companies often find that they already face risks from natural disasters, equipment failures and security breaks. Reputable SaaS firms with good answers to the above questions can alleviate those risks for the application they're providing.

An SaaS CRM or time management solution may be just what you need. Consider that SaaS removes much of your IT cost, reduces the risk involved in acquiring new software, allows you to influence product and service quality via an ongoing relationship with the vendor and gives you the flexibility to change usage commitments as business circumstances change. Furthermore, this approach allows you to more accurately predict your ongoing expenses and lets you focus on your real business--which, no doubt, isn't managing software applications.

The prevalence of hosted CRM and time tracking solutions is rising, and many companies will opt to try it if they understand the clear benefits. After all, all they have to lose is one month's rent.

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