Sold on SaaS

has a culture aimed at providing world-class customer care," he says. "We plan on having a long-term relationship with them, and we wanted a partner that understands our culture. That's critical."

Ackerman says he considered 10 companies before settling on RightNow.

He cautions that just because an SaaS provider has a tried-and-true packaged application, don't assume that users can tap into it like an electrical utility. RightNow provided the plumbing for the knowledge base behind the FAQs, Ackerman says, but eHarmony devotes one full-time person to maintaining and improving them. "RightNow is a great product," he says, "but it's not going to do it by itself. You need to put man-hours into it, and you need to analyze your data. If you just put it out there, it will work, but you won't get the bang for your buck."

SaaS to the Max

Company: Dreambuilder Investments LLC

Location: New York

Business: Mortgage resolution and investment

Dreambuilder buys "nonperforming" mortgages out of the subprime mortgage swamp, and business is booming. In fact, Peter Andrews, president and founder of the mortgage investment company, says he probably wouldn't have been able to keep up with the growth if he had traditional in-house systems. And it's fortunate he has no in-house systems, since he has no in-house IT staff.

His IT staff works for Salesforce.com. Andrews uses its Partner Relationship Management (PRM) system to manage and track the investment deals that flow through Dreambuilder's national network of partners. He says he uses PRM "out of the box, plus a ton of custom objects" that he wrote himself.

Andrews explains that, although users typically can't modify the software behind SaaS, even nontechnical users can "customize" the application with the standard user interface provided by the vendor. The user just builds and populates tables that become part of the application's database, he says.

"I have a custom object for my private investors, another tracks my deals, another tracks my interaction with the first mortgage, one tracks my note buyers, and so on," Andrews says. "We use PRM to run every aspect of our business, from A to Z."

In addition, Andrews uses another external party to host software for running complex analytics to score mortgages, and he uses EMC Corp.'s MozyPro remote service for data backups. The only IT inside his four walls is the Microsoft Office software running on employees' desktops.

Andrews says his company will do US$8 million in business this year and $50 million next year and will be at $200 million within three years.

Won't he want some in-house systems and staffers by then? "No," he says, "because I spend about $2,000 per user per year on Salesforce. So we are spending maybe $60,000 per year, but that's a drop in the bucket compared to what I'd have to spend for an IT infrastructure."

Still, SaaS comes with some built-in worries, Andrews acknowledges. "You are taking a very significant risk that if Salesforce goes down, my company goes down," he says. "But we have been down a total of two hours in two years."

As for security, he says, "they secure the data of some of the largest financial institutions in the world. If [Salesforce] can secure their data, I'm not worried about my data."