Stealth SaaS Purchases Can Hurt Sourcing Strategy

Ann All
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SaaS Makes BI Work

Self-service BI is all about empowering the end user and removing the high barrier to entry, both in terms of CapEx and in-house expertise.

Last November, I wrote about IT's concern over piecemeal deployment of software-as-a-service applications. For IT, SaaS is yet another twist on the centralized vs. decentralized debate. IT prefers a centralized approach to enterprise technology, because it's easier to secure and support. Business users want the added flexibility of decentralization and are willing to do whatever it takes (like adding technological tools without IT's knowledge) to get it.


One aspect of IT's angst over SaaS relates to its disruption of traditional sourcing and vendor management functions. A Computerworld UK story quotes Forrester analyst Liz Herbert:

With all sorts of services, employees are self-provisioning without any involvement from IT. While these systems can provide a lot of value, businesses do need a clear, structured approach.

I certainly agree with the need for structure in purchasing. Due diligence may get short shrift from business units buying a SaaS point solution. Business units would be less likely than sourcing departments to worry about total cost of ownership, service-level agreements and negotiations over added services, all areas that should be spelled out in vendor contracts. I also think it'd be more likely for business units working on their own to purchase duplicative or unnecessary services, and it would make it more difficult to lower costs through volume discounts. Beyond these routine considerations, stealth purchases render it pretty much impossible for organizations to adopt a strategic approach to sourcing.


In my "centralized vs. decentralized" post, I referenced a Saugatuck Technology report in which the research firm predicted companies would develop and adopt standard practices that will help drive down costs of cloud computing. Specifically, they suggested we'll see uniform parameters for procurement (encompassing technical requirements, performance and availability requirements/expectations/SLAs) and requirements/minimum criteria for security within and between cloud solutions and on-premise systems.


While this does seem likely, it's fair to say we're not there yet. As Herbert says:

Often businesses are still trying to force SaaS into old-fashioned hosting templates, so there need to be some real changes.

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