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Former Member

No doubt, Software as a Services solutions are already in use by the business folks in your company, perhaps even by your IT department. Employees will continue to bring in new SaaS solutions virally as they seek the tools they need to get their jobs done. Rather than oppose this reality, IT should embrace it with a process that helps business colleagues to quickly procure and effectively manage services that meet company standards.

Here are seven suggestions of how IT can help their business colleagues be more successful with their SaaS choices.


1. Be a bridge builder

In this new cloud-centered IT paradigm, business departments and employees can and do  purchase, roll out, and administer its own software services. They even hire or contract their own shadow IT teams to deploy their own systems in private or public clouds.   This requires a more collaborative governance process to be in place. Rather than thinking of gaps between IT and business, there needs to be a balancing of “the good of the department”,  “the good of the company as a whole”, and “the good of the user.”

If your company already has a good governance process in place, adapting it to fit a cloud-centered strategy should not be too difficult. If business governance of IT is a concept not understood by your company’s business leaders, then start by recruiting advocates from the business departments who understand business problems caused by technology decisions in other departments to serve on constituent councils.


2. Think like a nomad

Compared to on premise software purchases, enterprise SaaS agreements are short term. Typically they are year-long contracts, with three years being among the more long term. The old days comparing buying an ERP system to getting married to the vendor don’t really apply since what we’re really doing now is “going steady”.

Another consideration is that you never know when your SaaS vendor might be leaving you in a hurry, or why you might need to leave....  A couple of scenarios relate to the volatility of small and midsize SaaS vendors. Startups are never that stable, and midsize companies are subject to acquisitions, which may or may not be favorable to your company. By raising this uncertainty, I’m not trying to discourage subscribing to services of such companies. In fact, the subscription model should reduce the risk of working with these companies, provided you maintain an ability to exit if needed.

Finally, here is another item to consider. Software as a service is undergoing significant technological change. In the early days business processes outsourcers like ADP, and pioneers like Salesforce had to develop a lot of techniques to provide a high quality profitable service. Now many of these formerly home grown features are now available from IT management software vendors and IaaS and PaaS vendors. In addition, industry trends such as big data, mobility, and social enterprise are impacting SaaS offerings. I expect there will continue to be considerable innovation in the next few years in SaaS offerings. However, it might require moving to an entirely new service to gain these new capabilities, and thus you’ll need to vacate a rapidly obsolescing service offering.

In SaaS, you are paying for flexibility of short term agreements, so here are some considerations to ensure that you maintain this flexibility:

  • How can your company get its data out should it decide to switch to a different service?

  • How can your company flex up or flex down the number of users with the best discount, and lack of penalty?

  • How can you minimize customization within a service, unless you have a good reason?

  • How dependant on a specific service’s APIs and platform are your home grown apps, and how easy would it be to port these to a different service if needed?

  • How fast is your company and its needs changing?


3. Be the orchestrator of process

Unless your company has organized itself specifically around its business processes, chances are your company’s business flows between departments and departmental organizations – in other words, your company is organized by silo. Point SaaS solutions can exacerbate these silos.

The remedy is for your company to begin documenting its interdepartmental business processes. Often this “business process office” exists in either the COO’s organization or within Global IT. As part of the procurement evaluation of a SaaS solution, business process interdependencies should be documented. Some considerations:

  • Will the business functions performed in the SaaS solution replace an existing process, or is it a new process?

  • Is the process duplicative of any other processes in the company?

  • Is this the main “trunk” of a business process, or will this solution manage an exception?

  • What is the “value” of the business process in terms of revenue or costs impacted?  A simple formula for value computation: number of time process will be invoked per month x average revenue or cost element per invocation.

  • Is this process part of your company’s competitive advantage, or is it a commodity process?

  • What is the information flow between systems in the process. Where do “media breaks” occur that require manual transfer of information between systems?


4. Be the architect of information

Closely related to orchestrating business process is keeping control over your company’s “enterprise information architecture.” How will you ensure high quality data and visibility of operations, especially if each of your business departments is procuring software services from different cloud ...? How can you support executive needs for up to date business intelligence and reporting dashboards? This is an example area where a business constituent council can be very helpful in developing needed governance.

If your company has a mature IT operation, likely you have standardized your company’s core operations on an enterprise suite which provides the basis of a company-wide information architecture.  Using SaaS as an add-on strategy means keeping tabs on add-ons to your company’s information model, as well as ensuring that “single sources of truth” and dependencies are maintained. You can determine what kind of data integration strategy is required, if any, based on priority of data sources.

In addition to the data model, there is the consideration of maintaining data quality and instilling data governance. Likely, when you migrate data into a new service, you will spend considerable effort cleansing and enhancing the data. How do you prevent data quality from degrading again? What data quality and governance features are available in the service?


5. Be the keeper of standards

Your company should set minimum standards for SaaS applications. The standards should also be flexible to apply to the relative importance and performance requirements a service needs to have. For example: requiring 99.999% uptime for an employee benefits management service might be overkill, but security requirements for the same service may need to be high since data may store employees’ personal information.

Personally I also feel that there needs to be some fairly simple assessment as to how strongly company standards should be enforced on a proposed service. For example, if the SaaS service has only a few users working on a process with low overall value, with no customer, partner, or employee confidential information, and the total cost to the company is low, then perhaps an extensive IT audit is not warranted.

Examples of standards IT should be setting for critical cloud services relate to:

  • Data center location and practices

  • Data access, security, protection

  • Regulatory compliance

  • Sarbanes Oxley compliance

  • Identity management

  • Integration, APIs, Reporting

  • Support & maintenance

  • Vendor roadmap visibility

  • Service Level agreement terms


6. Be an expert service broker

You can expect your business managers to be extremely good at understanding their business problems and requirements. It’s unreasonable to expect them to know how to expertly procure IT services. Rather than road blocking the contracting of IT services, IT can become an expert broker of these services.  Examples of services that IT can provide to business units looking to procure a service:

  • Vendor negotiation – especially if multiple services from multiple departments come from the same vendor


7. Consult in traditional IT competencies

The traditional competencies of IT still apply in the cloud world. The difference is that IT is less likely to be mired in technical details of running solutions, and instead will be managing services or consulting to business departments that contract services. Key IT skills such as project and portfolio management are still desperately needed by these departments even when they are responsible for administering their own service.

Example consulting services IT can provide include:

  • User experience – especially customer and partner experience. In fact, one can argue this should be subject to collective governance since user experience can profoundly affect customer experience, and thus the company’s brand. User experience design services can be an important add-on to this competency.

  • Business process design and optimization. In addition to mapping, IT can be the competency center for business process management.

  • Information architect – as described in point #4, IT provides the data architectural services, and may also be the management service for the company’s BI capabilities.

  • Innovation catalyst – People who think innovation comes out of the IT department are missing what business innovation really is.  However, the IT department, when working closely with business teams can be the difference between an invention and the company realizing an innovation. IT is especially great at providing standards upon which invention can grow, and ensuring that innovations can scale.

As you can see, there’s plenty of need for the in-house IT department to continue. It’s just that, as continuously happens, technology and consumption changes, so the IT department has to retool its skills again to effectively serve the business.

To learn more about the role of IT in a hybrid cloud enterprise, I encourage you to join the discussion at SAP’s Cloud Community.

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