friend-or-foeCloud computing is a reality in most corporate computing environments today and, like it or not, is an increasingly important part of the enterprise computing landscape. There are several important aspects of cloud computing, particularly in its Software as a Service (SaaS) variation. These include:

  1. Little to no capital outlay.
  2. Low barrier to entry for the customer–sign a deal and you are in!
  3. Relatively attractive pricing.
  4. Often, few decisions to make–what you see is what you get! (Little to no customization opportunities.)

Some Software as a Service Implications

The four aspects of SaaS outlined above lead to a couple of important implications:

  1. Reduced dependency on central IT to find, evaluate, procure, operate and maintain a business solution.
  2. While entry costs might be low, overall life cycle costs for SaaS solutions can be significantly higher than traditional IT solutions. (The typical business model for SaaS providers is to fully recover costs in 4 years–revenues collected beyond that period are essentially pure profit.

The danger here is that with the attractiveness and ease of engaging of SaaS services, many business executives will see this as a pure business decision, and sign up without involving their IT departments.  Many will do this in ignorance of the wisdom of involving enterprise IT–others will do it as an expedient measure, believing that it is easier to ask forgiveness later than to ask for permission up front!

Implication #1 – The Funding Challenge

Depending upon your IT funding model, the ongoing costs of SaaS solutions may well show up in the IT budget, even though IT was not involved in the procurement decision. To use a crude analogy, it’s as if your teenage son took a second mortgage on your house to remodel their bedroom without asking your permission — and the second mortgage is in your name!

Implication #2 – The Architectural Challenge

The direct engagement of the SaaS solution by a business unit might lead to redundant or incompatible solutions. For example, business unit A might sign up for a Learning Management solution. Subsequently, business unit B decides to sign up for their own Learning Management solution. The company now has two different Learning Management solutions, leading to higher costs than if one solution had been shared, and a major headache for the Human Resources organization trying to manage staff development as an enterprise-wide initiative. To pick up on my house analogy used above, this is as if your teenage daughter now remodels her bedroom and signs up with different cable TV provider from that procured by her brother–and dad now has two cable TV bills to pay, but is unable to watch his favorite channel because it was not included in either of the cable TV services!

Implication #3 – The Data Analytics Challenge

As each business unit engages its own choices of SaaS solutions, the ability of the company to make meaning from all the data that passes through it becomes more and more difficult, as disparate solutions fragment the overall data picture. The promise of “big data” collapses into the nightmare of “what data?” and “whose data?” Back to our analogy, dad has to hunt around just to find out what TV channels are available in his house, and who is watching them!

Implication #4 – The Wrong Problem/Wrong Solution Challenge

In many cases, the business unit signing up for the SaaS solution may not have applied the analytical skills and experience to understand the root cause of the business problem they are trying to address. Whether or not the SaaS provider was taking advantage of an unwary buyer, the provider does not have the business context, analytical skills or incentive to really understand the customer’s business problem and to ensure they are getting the best possible solution. It’s as if the teenage children are being sold High Definition TV channels that won’t work properly on their low definition television sets.

The Business Relationship Manager Solution

These implications can be headed off at the pass if there is a skilled Business Relationship Manager (BRM) in place who can act as a bridge between the business unit and its IT organization, and can work with the SaaS providers to ensure the right problems are being solved with the best possible solutions. They can ensure that the funding, architectural and data management perspectives are all taken into account, helping to orchestrate the appropriate business and IT resources. These benefits of a well-implemented BRM role have existed for years. In the age of SaaS and Cloud Computing, the role becomes even more valuable.

What other challenges have you seen surface from the inexorable move towards SaaS?

Note: My next on-line BRMP Certification course is being held across 3 Tuesdays—September 2, 9 and 16 . For details, please click here.