One of the biggest selling points for SaaS (software as a service) is its potential to reduce enterprise IT support costs. The key to these savings is the fact that SaaS allows companies to outsource its hardware and software maintenance and support responsibilities to the provider. If you’re an IT leader at a small or midsized company with a small staff, SaaS indeed can be a lifesaver, providing a way to stretch limited in-house IT resources.
At the enterprise level, however, it’s less obvious that SaaS really delivers significant support savings. The “sweet spot” for SaaS support is its ability to offload basic IT systems maintenance; it isn’t designed to solve business problems demanding new technologies, applications, and business know-how. In short, if you’re running an IT operation that is focused on business innovation – and that’s certainly a good place to be – then SaaS is not going to relieve your support responsibilities the way it would in a smaller company where IT is run more like an “engine room.”
Now let’s talk about the cost side of support in a SaaS environment.
The biggest concern for most enterprise IT groups is their highest operational expense: payroll. They reason that by outsourcing applications to SaaS providers, they can reduce their internal staffing costs accordingly. In reality, however, there are few companies that end up shaving payroll or shedding staff through a SaaS arrangement. Instead, these employees are redeployed to other IT projects. The net result is that IT organizations that turn to SaaS might at least be able to keep their staffing needs stable over time – although given the fact that SaaS is still a relatively new trend, even this remains in doubt.
A second side of the SaaS support model that looks attractive is the “pay as you go” concept. Companies are not saddled with new hardware and software investment and depreciation costs, and they also know that they are only paying for what they are using.
But looking at payroll and capital expenses doesn’t tell the whole IT support story. There is a strong argument, for instance, that more IT energy must now go into managing the SaaS vendor, ensuring that the vendor is developing new capabilities (if the SaaS resource is an application) that will benefit the business, and also continuing to meet with end users within the business to identify and organize these needs into priorities for the vendor. If the vendor cooperates and makes changes to the SaaS application, it is also internal IT that must ensure that the process meshes with existing business rules and processes and that it doesn’t disrupt the business. In short, what we used to call “support analysts” in IT are morphing into “systems and business process analysts” under the SaaS model.
We likely will not know for several more years what the final impact of SaaS will be on IT support costs, although it appears that we already discovering that IT support in large enterprises will not simply “go away.” Instead, it is transforming into a new type of support that is more business process oriented. For businesses that want agile IT organizations capable of responding to changing business conditions, this is clearly a good thing.
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