Who Says You're Not Using SaaS?

Matthew McKenzie, Editor in Chief / Community Leader | 6/25/2010 | 4 comments

Matthew McKenzie
A gap has opened between the perception and the reality of SaaS (software-as-a-service) in the enterprise. Not just a gap -- a chasm.

And while your IT organization is standing on one side, a lot of your users are probably standing on the other.

Ray Wang, a partner at Altimeter Group and the author of the blog, A Software Insider's Point of View, has been following this trend for a while. In anecdotal terms, he sees the same thing that a lot of other folks see: While IT is still skeptical about SaaS, the business users they serve are chomping at the bit to adopt it.

But anecdotal evidence is one thing. Backing it up with numbers is another. And Ray Wang's got some really interesting numbers to share.

He recently asked both IT leaders and business procurement managers at 100 Global 2000 enterprises the same question: "Are you using SaaS in your organization for major business processes?" He got responses from 46 enterprises -- not a huge sample, but I think it's big enough to be tell the story.

It probably won't surprise you that out of those 46 IT leaders, less than a quarter said they were using SaaS applications today. There was a lot of interest in SaaS, but also a lot of questions -- about data integration, about support, and especially about governance and risk management.

But what about the procurement managers on the business side of these enterprises? That's where things get interesting: All 46 of them had signed at least one SaaS contract, involving anywhere from five seats up to 2,000 seats.

Here's what these managers were telling Wang about their decisions:

As the procurement head at a large professional services firm indicated, "The teams will buy whatever they need now. IT has no clue!" "Business has to go around IT because they are too busy keeping the lights on", retorted a procurement manager at a global 10 pharma. A procurement manager for a large multi-national manufacturer stated, "Our main issue with SaaS is finding enough solutions that will support our needs."


These business leaders aren't just working around IT to get what they need. They're cutting IT out of the loop and not looking back.

According to Wang, when he went back to the IT leaders with the results of his survey, they responded with "amazement and surprise." That's understandable, but it raises the question: What are they going to do about it?

In the long run, this is a situation where nobody really wins. IT is losing control over how, when, and why business users implement SaaS solutions -- and they're losing respect and authority in the process. But business users are also losing IT expertise and risking their ability to work with IT to address their long-term needs.

Ultimately, it's IT's job to bridge this chasm. IT leaders need to spend less time digging in their heels and more time actually communicating with business users. They need to weigh the risks of adopting SaaS against the cost of doing nothing -- and letting users take matters into their own hands.

Maybe it's not the most attractive choice in the world. But it's one your IT organization has to make.

View Comments: Newest First | Oldest First | Threaded View
Matthew McKenzie   Who Says You're Not Using SaaS?   6/28/2010 11:36:36 AM
re: who says you're not using SaaS?
Paul, I'm guessing that a lot of these SaaS applications are on the lower end of the scale -- five seats, or 10, or a couple dozen. Many are small enough that if they fail, they'll sink without a trace and the people who set them up in the first place will quietly pretend they never happened.

The bigger ones are a huge problem. I would love to know more about the business unit that bought a 2,000 seat SaaS implementation without putting IT in the loop and how they're doing with it.

Either way, though, the real problem is the mindset at work here: IT doesn't get it, never will get it, and should be worked around as much as possible. It's a disconnect that has been around forever, but now people can act upon their frustration, and it's gonna get ugly.
Paul Bonner   Who Says You're Not Using SaaS?   6/28/2010 12:39:37 AM
re: who says you're not using SaaS?
Wow, those are pretty impressive numbers. And awfully depressing ones for IT -- I don't see any way to interpret them other than that, having been given an opportunity by Saas vendors to cut IT out of the equation, business is leaping at the opportunity to do so.

I'd be willing to bet that almost all of those installations will fail, because nobody will have gone through the hard work of really analyzing requirements and thinking about how to rationalize processes. But who is going to recognize that that is what's happening and provide the necessary oversight? It's really a governance issue--can IT assert its primacy as the solutions provider for the enterprise--no matter where those solutions are housed or who codes them? Otherwise, the already way-too-common pattern of buying technology in lieu of improving processes will increase ten-fold, as will the number of "technology failures".
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batye   Who Says You're Not Using SaaS?   6/27/2010 9:04:18 PM
Re: Define your business processes well

Define your business processes - is a must

but in my experience  I did not see anywhere in the Co's. where I use to work before  - business processes are clearly defined and documented, and then to carry out these tasks...

maybe in perfect world...

but in reality even on the same floor between two departments across few cubicles

miscommunications do happens more often ....
Taimoor Zubair   Who Says You're Not Using SaaS?   6/26/2010 5:26:49 AM
Define your business processes well
In organizations where your business processes are not defined clearly, there is likely to be confusion and problems. And to solve them, the users try to seek help from different sources. And, in some cases, this also also includes getting software to fulfill a current need. What really should happen is that the business processes are clearly defined and documented, and then to carry out these tasks, the appropriate software be selected in consultation with the IT department. Whenever there is a change in a process, the IT team should be consulted as well.

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