David against Goliath, or the SaaS’ threat to IT

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Customers are adopting SaaS (Software as a Service) applications at an incredible rate; according to Forrester, the SaaS market will go from $27 billion to $250 billion within the next eight years.

In the majority of cases of SaaS, business lines are adopting collaborative applications, web applications/web serving, data storage, business apps and productivity apps. These business lines realized they can get innovative services delivered to their desktop in minutes instead of months by simply using their credit cards.

 

Imagine you are a marketing department and you need a blog. By registerting to a SaaS solution your new social media tool is up and running three minutes after purchase.  The new service offers all the functionalities you ever dreamt of for a couple of dollars per month.

 

Why are Business Lines looking outside conventional IT?

 

Behind the cover, there are two main innovations that made SaaS on the top of the list of every business department today:

 

1— SaaS solutions are innovative and do exactly what you expect from them. In many cases, they are actually better than "old/legacy" solutions, even when they provide only 10 percent of the functionalities. The majority of the successful SaaS vendors have been doing a very good job in re-visiting customer needs, and developing capabilities that are clearly innovative by using the latest technology on the market. And many of them received some nice funding from Venture Capitalists or Business Angels that would make any IT department jealous.

2—The consumption/business model of those SaaS solutions is simple and efficient. Out with the “old” software licensing model with its box of three DVDs, 1500 pages manuals and 30 patches to install depending on the OS you're running is clunky. And I am not even mentioning the costly and painful updates/upgrades process. With SaaS, you have your brand new CRM system up and running in minutes, and you can even play with it for free for a limited time in case of you are hesitating. How cool is that?

 

Is it right to view SaaS as an enemy?

 

That all sounds very attractive for the business, but what's about IT? Well, in the conversations I recently had with our customers, the response adopted by IT seems to be pretty close to the famous three monkeys figures (I don't hear anything, I don't see anything, and I am not telling anyone). After all, those SaaS solutions are evil competition to them, so they better ignore them or talk loudly about the risks in security, performance and availability of those solutions (sounds familiar?).

Unfortunately, those arguments are slowly fading out. Recently a famous Spanish bank moved the majority of their employees to a cloud email solution, so I am assuming they made a deliberate decision and took into consideration the risk in involved (what’s more important than security and privacy for a bank?).

Salesforce.com hosts the customer information (what's more important than that?) of almost 100,000 customers today.

Also, l personally can't recall when my Gmail account was down the last time.... but I do recall when my company email account was down last time.

 

What Role is there for IT in the Future?

 

There is no excuse anymore— IT has to stand up and take ownership, otherwise it will end up supporting islands of shadow IT. It might not be the best idea to forbid access to those SaaS solutions, Instead, IT should work with the business units to identify why they are in desperate need of the services offered, and initiate a strategic buy/build discussion. IT needs to be involved in the first phase of the service lifecycle— the requirement collecting phase.

Everyone in the company will benefit from an approach that makes IT closer to the business. The decision to on-board or not a SaaS solution is a core/context conversation and if the decision is to do it, then IT needs to make it is secured, performing and integrated. On the other side, if the decision taken is to not on-board, then the right justifications should be provided.

 

So, how do you make it happen? A well-structured approach, involving services and software capabilities will help your organization:

1. Understand the business value of services. Tracking business requirements is a mandatory step that IT needs to excel in. That's how IT can prevent users of a marketing group from using a public social media platform that would jeopardize the privacy policy of the company.

2. Understand the TCO of a solution. An email account at a public cloud email provider sounds very cheap. But how much does YOUR current email solution really costs per user? The majority of CIOs have a hard time answering this question. Some of them do the research and find out that a public cloud email service is actually MORE expensive than the in-house option.

3. Find the best vendor. If the best strategy is on-board a SaaS solution, then which one is the best vendor? Find one that is financially stable, and can commit to fulfill your current and future needs? Having a vendor management process is key at this point.

4. Deliver and Manage the SaaS solution through the enterprise catalog. Ultimately, whether your social media platform comes from internal IT or from an external vendor does not matter to the business. They should actually not see any difference. IT is responsible to make sure the experience is preserved, while working in the back office to make sure security, privacy, performance, availability and support are not compromised. The process of bringing a SaaS solution on-board has to be project-managed like any other project.

 

Finally, I can only emphasize one last time the importance of measurement. CIOs can make better decisions on whether to buy or build services by tracking the needs of the lines of business, and the time and costs it takes to fulfill those needs within the technological and legal constraints of the company. Business lines will get better at anticipating their customer’s needs and improve their sourcing strategy. IT will perform better and become a broker of technology-enabled services.  Looking at this, SaaS solutions are not your enemy, but rather your partners.

 

 

Guillaume

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11 years experienced business development and marketing professional specialized in innovative and disruptive technologies.


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