How SaaS Can Turn Into A Nightmare For A CIO

by drjim on July 25, 2012

Image Credit
Caption: Boo! That SaaS monster is going to get you CIO…

Caption: Boo! That SaaS monster is going to get you CIO…

Yea Cloud Computing! Everyone is in the process of falling in love with cloud computing and its sister Software-As-A-Service (SaaS). What CIO wouldn’t love an opportunity to no longer have to buy and pay to maintain computing hardware that was only going to become obsolete overtime (this is almost a part of the definition of information technology)? Although SaaS does offer a lot of benefits, it’s starting to become clearer that there are some serious drawbacks to this solution also…

What Do You Mean Goodbye?

When CIOs think about cloud computing providers who operate in the IT sector, the names of Google, Amazon, and IBM often come to mind. These are big, established firms that we all believe will be staying around for a while.

However, when it comes time to subscribe to a SaaS application, we often find ourselves making a purchase from a smaller firm that has sprung up to service a very specific niche. This can cause some problems.

The issue is that smaller firms can either run into financial problems or get bought by larger firms. No matter what happens, the end result is the same – they go away. What this means for a CIO is that you had better have a plan for what the firm is going to do when your SaaS vendor shuts down.

Hidden Costs

Just as it was with the outsourcing craze that swept through the world of IT back in the 1990’s, cloud computing is all the rage in part because of the savings that it offers to IT departments.

When it comes to why an IT department would adopt a SaaS application the list is long: ease of implementation, low upfront costs, a potential to be able to reduce IT headcount, etc. What’s not to love here, right?

Because SaaS subscription fees show up on the IT department’s books as operational expenses instead of capital expenses, they can often fly under the radar. However, over time these SaaS expenses can grow as the company becomes more and more intertwined with the SaaS application and by the time the hidden costs become visible, it may be too late to leave the application.

I Don’t Love You Any More

Which brings us to the ultimate question: would you be able to say goodbye to a SaaS application that the firm had started to use? These types of relationships can be quite messy to undo.

Think about it, how much work the company will have put into working the SaaS application into your workflow. You will have developed processes, workflows, and probably even infrastructure that will be tailored this this SaaS solution. Trying to move to a new SaaS application will be difficult at best.

What All Of This Means For You

The arrival of cloud computing means that SaaS service offerings have also arrived and they have become a key part of the importance of information technology. The appeal of SaaS is that a CIO can save a considerable amount of money in upfront equipment purchases and the staff that is required to maintain the equipment. However, SaaS comes with its own set of limitations.

CIOs need to be constantly aware that their SaaS provider could suddenly go away. A backup plan is always needed. SaaS services may appear to be less expensive initially; however, the long-term costs may rival other alternatives and must be investigated. Finally, if a CIO decides to switch SaaS vendors, he or she may find that it is very hard to do.

The economic benefits of switching the company’s IT department over to using SaaS solutions are compelling. However, in this brave new world, there are a number of hidden dangers that CIOs need to be aware of. Take the time to do your homework and you’ll be able to reap the benefits of SaaS while avoiding the hidden pitfalls.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: How often do you think that a CIO should update his or her SaaS provider backup plan in order to prepare for them going away?

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What We’ll Be Talking About Next Time

Is Twitter for real? I mean, is this going to be another one of those social media things that springs up, is hot-hot-hot for a bit, and then fads away and is forgotten? I don’t have a crystal ball and so I can’t tell you if Twitter has any staying power, but as a company’s CIO in addition to running the IT department you are going to have to help come up with the company’s Twitter strategy

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