Closing the gap between IT and SaaS

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One of the big challenges the SaaS industry continues to face (which we talked about at our presentation at SaaS University last week in Chicago) is the gap that exists between the APIs/management access that SaaS applications provide today and the expectations of CIOs and IT teams, particularly in the enterprise.  The end-customer CIOs we’re working with are typically surprised at how difficult it is to integrate most SaaS applications into their existing management processes and solutions –  a CIO we recently spoke with just assumed that all major SaaS applications supported direct integrations into Active Directory and LDAP.  On the flip side, most SaaS vendors are being faced with IT requirements and expectations they haven’t yet considered, let alone support in their services (though there are exceptions) particularly in identity-related areas such as user authentication and access control.

Why is this important?

IT is regaining its seat at the table when it comes to SaaS.  In mid-size enterprises, as SaaS adoption has accelerated cross-functionally organizations are beginning to look to IT to centralize management and governance of SaaS applications and users to minimize compliance risks and administrative costs.   In a recent survey we found that IT was involved in management and administration of SaaS applications in 72% of multi-SaaS organizations.   In larger enterprises that are now taking a serious look at SaaS, IT is involved from the start to determine how the applications will be integrated into broader business processes and other on-premise applications, as well as management processes and solutions.  We’re starting to hear from both types of organizations, as well as the SaaS vendors that serve them, that application ‘manageability’ is becoming a consideration in sales cycles – in fact we’re aware of several situations where an incumbent SaaS provider was displaced by an offering with improved API and management access.

Why the disconnect between SaaS vendors and IT?  Based on our experiences and interactions with both sides of the issue, the gap that exists between SaaS applications and IT is driven by two factors:

  • SMB legacy – the majority of leading SaaS vendors (including Salesforce.com) grew from an initial focus on SMB customers.   Applications were architected and optimized to solve a specific functional business problem for this initial class/size of customer, with (understandably) limited focus on how the application would have to integrate into multi-SaaS or enterprise environments.
  • IT as ‘the enemy’ – the ease of deployment and flexibility of SaaS eliminated the need for business users to involve their IT organizations in the selection, configuration and management of SaaS applications.   As IT historically has neither been a decision-maker or influencer in the sales process, most SaaS vendors haven’t been exposed to IT organizations, particularly in the enterprise.  In fact, IT was and is often times (and often unfairly) characterized as the enemy of SaaS adoption, needlessly entangling business users in red tape and bureaucracy.  IT teams have also been part of the problem, often taking little interest in administering or managing SaaS applications.  In either case, most SaaS vendors have had relatively limited interactions with enterprise IT organizations, particularly when compared to on-premise ISVs.

We fundamentally believe that for SaaS adoption to continue to accelerate in both midmarket and large enterprises that the gap between IT requirements and SaaS application capabilities will need to be closed.  SaaS vendors need to improve APIs, management access and visibility in areas such as user and identity management, activity logging and monitoring, service management and back-office/financial management.  More on this to come….

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