On the surface Serena Software is an old-school vendor. Its business is the dull side of software development—application lifecycle management (ALM)—which includes things like version control, requirements management and change tracking. Furthermore Serena has a mainframe heritage although it has diversified over the years to cover most operating systems, particularly when it acquired its largest independent rival Merant four years ago.

As if to underline its conservative background, its main competitor is IBM's Rational. But as its larger nemesis tries to work out how to make itself relevant in the new age of cloud computing, Serena's management team has pushed the company straight in the deep end. And it seems to be swimming.

ALM is actually a very good fit for software as a service (SaaS), as cloud-based application delivery is termed. After all, software development teams are often widely distributed; small groups of developers based in the relatively expensive markets of Western Europe and North America being supplemented by larger offshore groups in other part of the world, especially India. ALM vendors have struggled to provide the levels of collaboration needed for such projects in the past.

To this end Serena has moved a number of its products over to SaaS-based delivery. This includes its TeamTrack product for managing development requirements, which it has renamed Business Mashups, a less meaningful name that is presumably supposed to reflect the times and Mariner for project management. Its next new product, Agile, will only be available as SaaS.

But perhaps the most intriguing thing about Serena is the changes it has made to its internal use of IT. Rene Bonvanie, senior vice president of worldwide marketing but also the company's chief information officer, has switched as much internal use of IT as he can over to SaaS.

So exit Microsoft Office and enter Google Apps (although existing licences of the former are still permitted). Email is now GoogleMail, costing $32,000 for 900 employees per year as opposed to over $1m for the old in-house servers. But, perhaps most intriguing is the use of Facebook as an employee portal, something that was novel for Facebook itself and the first time Quocirca has come across the social networking site being use in such a way, although some local government organisations have been spotted using Huddle. Bonvanie says the only on-premise application left is SAP and since the initiative to use SaaS started Serena has cut IT costs by 37 per cent.

Another new Serena product, Mashup Composer, even warranted a mention in The Economist's recent supplement on cloud computing - Let it Rise. Analysts are always on the lookout for IT companies practicing what they preach; well, at Serena, Quocirca has certainly found one. Any established company considering betting its future on the cloud could do worse than watch how Serena gets on—Quocirca will certainly observe with interest.