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SaaS (Software as a Service) or On-Demand application delivery as a disruptive delivery model is challenging traditional Enterprise applications. Adoption rate is the fastest in the SME (Small and Medium Enterprises) space. But, large multinational organizations are slow to embrace the on-demand delivery model.

SaaS has both pros and cons.

Some of the advantages of SaaS

1. Smaller IT resources.

2. Quicker implementation and faster training for the employees and thus reducing TCO (total cost of ownership).

3. Faster ROI due to lower up-front cost.

4. Lower hardware/software cost due to reduced investment in installing, upgrading and sustaining of enterprise system.

SaaS has some challenges that vendors have been successfully trying to address -

1. Loss of control: Because of Reliability/Uptime

2. Data security: This is a tough pill to swallow for the corporate executives. Can they trust third party vendors with the data?

3. Privacy of data: Who owns the data now?

4. Different integration need: How will the SaaS application integrate with the existing systems?

But, it’s not the cons of the On-Demand delivery model that is holding back the CIO’s of the large organization from joining the SaaS bandwagon. But, believe it or not, its one of the advantages of SaaS that is stirring up a political problem for the CIO. The main advantage of the SaaS delivery model is that it needs a smaller IT team. No need for large IT resource to integrate and sustain the traditional Enterprise application. Smaller IT department is great for reducing IT costs, but it creates the illusion of loss of power for the CIO. Typically, larger the department the more perceived power the executive possesses.

CIOs pretend that they need complex application, so that they can justify bigger budget and larger IT resource. If the enterprise application is outsourced (SaaS is a unique way of outsourcing) then suddenly there is no justification of a large organization. This development, in the tribal world of executives, leads to diminished power for the CIO (because he now has a smaller army).

In my view CIO should not fear the reduction of size of IT department. If the software systems that support tactical and non core businesses is outsourced then it frees up the resource to focus on the strategic aspect of the business. Identifying and implementing software systems that enables core competency of the organization will make the role of CIO more relevant to corporation.

Making a major impact on the business strategy the CIO can thus showcase real power in the boardroom even with a small organization.

About the Author:

Raj Sheelvant, Project Manager at Intel is passionate about aligning Information Technology with business needs. Business Process Re-engineering, IT Change Management, Management Training, IT Management, Globalization, IT Strategy, Leadership Development, Public Speaking are some of his wide area of interests.
Raj Sheelvant has served as A Project Lead at Intelidata and also as a Software Engineer at Braun Simmons, prior to his occupation as the IT Project Manager at Intel, Phoenix, Arizona Area.
Educated at the BDT Engineering College, he joined the University of Toledo to earn his MS, Engineering, 1990 - 1993. He is an MBA, International Management, 2005 - 2007, from the Arizona State University, W. P. Carey School of Business.

Views expressed here belong to the author and do not represent those of the ThinkingStreet or the author’s employer

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