Is SaaS a threat to CIO control?
- Reduce text size Decrease text size
- Increase text size Increase text size
- Print article Print
- Jump to comments Comment
- Share this article Share
- Email article to a friend Email
"The relationship has to be seen as consultative – that we’re here to help them get the solution that they want"
Can IT leaders maintain information strategy when business units procure their own applications?
Paul Maritz, chief executive of virtualisation software vendor VMware, has a theory about the evolution of the IT department. At any given point, he says, the job of the IT function is defined by the “canonical applications” that it supports.
In the mainframe era, the canonical applications were bookkeeping systems. “Back then, the CIO typically reported to the CFO,” he told delegates at a recent conference. “That was because the applications that were being run were glorified bookkeeping systems.”
Later, the client-server era gave rise to the customer relationship management (CRM) and enterprise resource planning (ERP) that characterise the legacy enterprise stack of today. This type of application has given the CIO a degree of authority, as they require specialist knowledge to implement and manage.
Today, though, canonical applications are on the move again – into the cloud.
For all the talk of infrastructure as a service, platform as a service and their impact on internal IT development, it is software as a service (SaaS) that will dominate cloud spending in the coming years, at least according to Forrester Research. The analyst company has predicted that SaaS sales will more than quadruple from $21.2 billion this year to $92.8 billion in 2016, by which time they will account for around 16% of the total software market.
SaaS applications have a defining characteristic that is already changing the internal balance of power over technology – they require no infrastructure, and so can be procured by business divisions without the involvement of the IT department.
How CIOs handle that today is likely to have an impact upon their roles and responsibilities in the future. As Jonathan Reichental, CIO of technology publisher O’Reilly Media, recently wrote, “When the dust settles, the provision of computing services in the enterprise will be entirely different. IT leadership had better be prepared.”
Losing the monopoly
For some, the rise of SaaS is one facet of the demise of the IT department’s control over technology selection. In April 2011, Susan Cramm, a former CIO, CFO and business author, wrote in The Wall Street Journal that the IT department should no longer hold a monopoly on IT decision-making.
“For both competitive and technological reasons, funnelling everything through the IT department no longer makes sense,” she asserted. “Instead, business-unit leaders need to start assuming more control over the IT assets that fuel their individual businesses.”
For Cramm, IT should support the transition to a model where business units have absolute control of their IT systems. In her view, IT should be responsible for turning pilot projects into enterprise-ready, battle-hardened systems.
Traditional IT departments are too cumbersome to react swiftly enough to business needs, she argues; business units will only be able to innovate when they have greater control over IT. The role of the CIO will be to define technology and data standards, and to ensure that systems are interoperable, secure and compliant.
This will be anathema to many CIOs, who have spent years fighting against this perceived loss of control. For them, business units – in other words those without deep-rooted technology experience – cannot be trusted to
guide technology strategy without overspending or endangering the integrity of the IT infrastructure.
A case in point is the US government. In August 2011, Jacob Lew, the director of the US Office of Management and Budget, a bean-counting unit with a hotline to the White House, sent out a memo to all US government department and agency chiefs detailing plans for cutting inefficient and wasteful IT spending.
Lew’s solution to years of waste was to give greater responsibility and more control of technology spending to agency CIOs. The aim, said Lew in the memo, was to shift the CIOs’ focus “away from just policy-making and infrastructure maintenance, to encompass true portfolio management for all IT”.
Writ large across the memo was the notion that unless CIOs have absolute control over the technology deployed across the enterprise, the result is likely to be duplication of systems, or worse the proliferation of incompatible technology.
NEXT> How one CIO strikes a balance, and the analyst view
