Next Steps

By John Jainschigg  |  Posted 2008-06-26 Print this article Print

IT leaders polled about software as a service confirm that it delivers robust applications—typically at lower cost than conventional deployment and licensing models. But implementation is slow in the enterprise core, where data security, availability and ease of integration remain key concerns.


As more examples of successful SaaS deployments become available, says Steggles, the benefits will become clearer, and IT accounting protocols will adapt. But as models shift, it’s becoming obvious that one preconceived notion—that SaaS would permit IT headcount reductions—is not coming to pass.

Only 19 percent of survey respondents using SaaS indicated that they had been able to reduce headcount as a result of their deployments. Those reductions primarily affected application development and help desk/support and maintenance positions, with smaller reductions reported in data center operations and project management.


Steggles explains why. “We have a backlog of projects that have been requested and prioritized—perhaps 5,000 hours of work on our to-do list,” he says. “Our annual IT budget will allow for only 1,500 hours of that work to be done. It will be spread across smaller projects—perhaps of 50 to 200 hours—and massive 1,000-hour projects.

“From my perspective, SaaS is not so much a way of reducing headcount as it is a way of not increasing it. If we can convert applications and reduce their management and support burden, we can have a more manageable backlog.”

Steggles concludes with a provocative query: “As we’ve committed more and more to this model, I’ve asked myself this question: At what point would SaaS not be attractive to me? What if it cost me more than a conventional application? Would I still use it?

“I’ve been forced to answer with a qualified ‘yes.’ It’s not that I want vendors to charge me more, but being able to focus on what’s important to the business, and not having to deal with something that isn’t a core competency, is really worth something.”


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