Many industry pundits and trade publications question whether Software-as-a-Service (SaaS) can penetrate large-scale enterprises because they believe it will fail to meet corporate procurement standards and satisfy escalating compliance requirements.

These concerns were echoed in a roundtable discussion within the SaaS cluster of the Massachusetts Technology Leadership Council this past Friday. At our monthly meeting, Eric Esperne, who is the President and Principal Consultant of James River Consulting, gave an in-depth assessment of the procedural hurdles SaaS vendors must face to win corporate approval from the procurement offices of major corporations and governmental agencies. Eric was an in-house attorney for MCI WorldCom and Cable & Wireless, as well as several small government agencies, for over 15 years. So, he speaks from experience.

Yet, THINKstrategies’ research and consulting work is finding that enterprises are not only getting more comfortable with SaaS from a procurement perspective, they are even looking at SaaS as a vehicle to address their compliance needs.

For instance, I had the privilege of speaking this morning with the CEO of Enviance, Larry Goldenhersh, as a follow-up to the company’s recent announcement that American Electric Power, one of the largest electric utilities in the United States, has chosen Enviance’s compliance management SaaS solution as its system of record for North American Electric Reliability Corporation (NERC) reliability.

NERC is certified as the “electric reliability organization” by the Federal Energy Regulatory Commission (FERC) making it responsible for maintaining the reliability and security of the bulk power system in North America. AEP has deployed the Enviance System to ensure compliance with the NERC standards. Enviance’s SaaS solution allows the power companies to centrally manage all aspects of regulatory compliance in real-time.

Larry informed me that demand for Enviance’s compliance management tool in the utility, chemical and energy industries is escalating as concerns about greenhouse gases and other environmental issues rise. The Enviance solution has gained acceptance because of its rapid deployment capabilities; ease of integration via web services with legacy software, such as SAP, and custom applications; and relatively low costs.

The success of Enviance is convincing major corporations and government agencies that SaaS is not only compatible with today’s compliance requirements, but can be a key enabling technology to meet these escalating regulatory requirements.

As a consequence, I’m hearing about a growing number of large-scale enterprises who are not only adopting SaaS, but are signing multi-year deals to capitalize on discounts and making a commitment to this new software delivery model to address business challenges that legacy software hasn’t been able to satisfy.