I’ve observed in my relatively short time on earth that I’m not the only thing that will be left “in the dust” – - so to speak. I seem to share that fate with many technologies as well. There comes a time in the lifecycle of innovation where every incumbent or status quo technology is displaced by something new and better. We’ve all seen it multiple times. The lifecycle that took us from mainframe to web technologies is a good example. Voice technology is another. In fact, we are in the middle of many of these transformations today. Traditional disk drive architecture to SSD is underway. On-premise software to SaaS is another.
In my role as a CIO within a SaaS company, I have had plenty of opportunity to speak with my colleagues in other organizations regarding their challenges and issues. Depending on our industry and market, the specifics of our challenges often vary greatly, but there are consistent and common themes. We are all trying to deliver “better, faster, and cheaper” while maintaining operational excellence. As a SaaS company, our business model really does represent how to do things better, deliver a quicker time to market, and do so at a lower total cost of ownership. My responsibility as a SaaS company CIO is somewhat unique in that I also take on the responsibility for risk management on behalf of my colleagues, at least in respect to the RightNow CRM application.
The real question becomes, how does a SaaS company represent their commitment and responsibility to a customer CIO, particularly in the areas of risk management? I’m talking about operational risk here, but the same concept applies to security or compliance risk. I think that the answer has to be the one we’ve adopted and accepted in so many other areas. The services agreement. Whether you are signing up for data center co-location space or DirecTV, you end up doing business at a services level, rather than just an infrastructure management level. The same goes for SaaS. In fact, RightNow just “upped the ante” in this area by offering up to a 99.9% availability SLA for those customers who are deploying our solution in mission critical environments; for example in integrated, multi-channel contact center desktops. That is great by itself, but we also went further and now offer to “send you a check” if we don’t deliver. A nice gesture to be sure, but the real comfort (and frankly, the whole point) is that putting “teeth” in your SLA is the strongest incentive and signal that we’ll take the actions required to avoid getting bit.
I’m fond of saying that “SaaS is just another tool in the IT tool-belt.” The truth is that it is an effective tool only if it works well. Working well is about providing the functionality and capability that the CIO needs to solve real world business challenges. Working well is about helping to manage their cost structures and drive positive ROI. Working well is about helping them to manage risk in their environment, not contribute to it. Delivering on these practical responsibilities of CIOs everywhere is not just a commitment we make to our customers at RightNow, it is also what will complete the transformation of software delivery from on-premise to SaaS…and we really don’t care where it runs.
What do you think? Is on-premise really headed for the dust bin like punch cards and acoustic coupler modems?
Laef Olson
March 13, 2009 at 9:05 am
Your CIO perspective is especially useful. Despite the fact that a SaaS application doesn’t run in their data center, CIOs are still concerned about support, security, integration, and configuration. SaaS marketers need to actively address these concerns.
By the way, I’m old enough to have used punch cards and paper tape to run programs!
March 18, 2009 at 2:25 pm
The vision and analogies are great, but let not overlook the presence of resistance to SaaS. Not just from the companies that want to “control and protect their own data”, but from all those companies out there who’s business model is “Technology Churn”. A lot of very powerful, influential and well established organizations have an enormous stake in the constant churn of computer hardware and upgrades. They have the wherewithal and motive to combat the SaaS paradigm, so it isn’t necessarily a slam-dunk. There’s a pretty good FUD machine working out there, and it isn’t Willie Wonka et al.
March 18, 2009 at 3:53 pm
Laef, good thoughts. It is interesting to read the thoughts of a modern CIO. It seems the role is shifting as quickly as the technology changes.
As a web child, the move will occur. To paraphrase Don Tapscott from Grown Up Digital, once the net generation moves into the C-level chairs, on-premise software will seem burdensome. The values in the SaaS model far outweigh the concerns which are continually being addressed and solved. Also, from a pure dollar perspective, the TCO is proven to be lower in the SaaS model.
I agree with Peter, the concerns of the organization don’t change. And SaaS companies need to address this. It is a burden for SaaS companies to jump thru all the hoops the enterprise requires, and many will do it. But in fact there are companies out there already taking care of these issues for SaaS providers. And, in fact, when an SaaS Provider is able to focus fully on it core competencies (continued product development and innovation) the results are better than many companies can do internally. And honestly, how many companies actually get five 9s, despite the goal?
Gary, the churn will still occur. It just won’t be from the same people consuming today. Rather it will come from the SaaS companies, the hosting vendors, colos, msps, data centers…ect. Technology around the servers and equipment will always improve. The question is who will control the consumptions?
This was a large topic of conversation at this years SaaS Summit. Here is a link to more information on that event.
http://www.opsource.net/saas/summit2009/
March 24, 2009 at 1:24 pm
Thanks for these insights. The one thing we all seem to agree upon is that SaaS is both transformational in how it provides value to companies who figure out how to effectively utilize it within their enterprise architecture, and also a tool that needs to address the same old needs that organizations have had since Peter and I were fooling around with punch cards.
The term I use internally and with our customers is “Virtual CIO.” It refers to our commitment to professional and transparent operations – in all of the various categories of Risk Management. This means that while I may be fully responsible and accountable for things like change management, capacity management, compliance, and security – - there isn’t any reason or value in keeping those processes invisible from our customers.
I think we are quickly moving toward a world where Enterprise CIO acceptance (and competitive positioning from powerful on-premise companies) will require SaaS firms to be both buttoned-up AND highly professional from an operational viewpoint.
My intention is to be leading that charge, not being dragged along kicking and screaming.
Thanks again for the thoughtful comments.
Regards,
Laef