What Enterprise Software Functionality Can You Turn over to an IT-Enabled Business Service?

Dennis Byron

This article by Eric Lai of Computerworld, Is SaaS and Recession Killing Perpetual Software Licenses, introduces a couple of strains of thought for IT staff and management to follow as you continue your 2009 planning.


First, in the article, recent IT Business Edge interview subject Roger Bottom of Acresso explains the financial/accounting reason why perpetual licenses continue to be the most popular way to acquire/maintain enterprise software. It is important to get an understanding of your chief financial officer's (CFO) position on these accounting rules before going too far down one software acquisition path or the other.


By the way, it's not all a matter of accounting. The popularity of licensed software over Software as a Service (SaaS) is not historically as large as conventional wisdom contends. After all, what are most McKesson/HBO, Siemens/SMS, GXS and Sterling Commerce ecommerce, FiServ, and so forth contracts if not SaaS? SaaS by that broader definition actually predates perpetual licenses and continues to be very popular as an acquisition method.


And the second point the article highlights is how Microsoft and others are going "live." I don't think Microsoft is going far enough with its Software Plus Service philosophy. You need more. The opportunity to bring forth to your top management, including the CFO, is not just that of going SaaS but of going IT-enabled business service.


The criteria should be to use an IT-enabled business service instead of licensed enterprise software whenever a given business process provides no particular competitive advantage. This is more than SaaS, more than outsourcing. ADP Payroll is the easy example to use to explain the concept, but there are many similar IT-enabled business services to propose to get mundane IT development and administration out of you shop in tough times. This will let you concentrate on business processes that do provide your enterprise competitive advantage.


So the better question might be: Are SaaS and the recession providing IT a chance to be heroes?

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