Discover PerformanceHP Software's community for IT leaders // May 2013
CIOs and CFOs: Who’s got SaaS?
Two C-suite veterans square off over the cloud—and where IT loses Finance’s respect.
There’s no question that software as a service is gaining traction in IT. Forrester Research projects SaaS acquisitions to grow to $75 billion in 2014.1 HP Software CIO Saum Mathur told Discover Performance earlier this year that SaaS was one of the key opportunities—and challenges—facing CIOs. And HP EVP of Technology and Operations John Hinshaw has recently been in the news talking about how HP internal IT is moving aggressively to SaaS.
With SaaS growing in importance as a strategic priority, we decided to make it the subject of our second CIO vs. CFO webcast. (This series, in case you missed the first one—about CIO-CFO roles and relationships—brings together two executives from the C-suite for a spirited debate about the issues most important to IT.) Returning for “CIOs and CFOs: Who’s Got SaaS?” were former CIO Toby Redshaw (now CEO at Kevington Advisors) and Dana Pacific CFO Sean Sloan.
Fundamentally, they agreed, SaaS brings up questions of control. Who should make decisions and set the strategy: IT or LOB/Finance?
Does SaaS signal distrust in IT? Or an opportunity?
Sloan came out fighting, citing LOB disappointment in past IT performance. “We have to understand why Saas has been getting traction,” he said. “It’s because guys like me—C-level guys, not just Finance—have invested a lot of time, a lot of effort, and spent a lot of money on a lot of failure in the past.”
From IT’s side, Redshaw said SaaS is “a real risk to underperforming CIOs.” SaaS puts pressure on internal IT to execute. “And with underperforming CIOs, the business takes control and pushes this out.”
But both Sloan and Redshaw agreed that SaaS is here to stay—something you must implement to achieve competitive advantage. “If you’re not going after this, you’re in reverse versus your competition,” Redshaw said.
Good cloud, bad cloud
The cloud has some really good solutions, Redshaw said, and some “awful” ones.
“If bad IT is playing with matches, bad cloud is playing with dynamite,” he said. “The security risks and the backout problems you have once you’ve gone big with a cloud solution are much worse than if you’ve got something [residing] in your data center.”
Some tips and caveats about SaaS from the two:
- Ease of use: “The biggest single definer of good cloud is … it’s designed for a zero training footprint,” Redshaw said. “You turn it on and use it.”
- “And it’s designed for very simple process modifications,” he continued. “It’s not like loading up SAP and you have to retool a third of your business.”
- Sloan warned that you need to make sure the financial metrics are sound. He said CIO involvement is needed to make that call.
Making SaaS work: CIO and CFO advice
So how can CIOs and CFOs work together to make SaaS successful in their organizations? What does each side need to know?
Redshaw had three pieces of advice for CIOs:
- Get “journey” talent. If you’re going to go on this new journey, get people in the trenches who’ve done this before.
- Start at the deep end of the pool. “Cloud is conceptually very simple,” he said, but it is fraught with problems. Do something that really matters, so you do have that learning.
- CIOs in general could be a little more humble and really listen to the vendors: “They’ve done this a thousand times, you’ve done it zero.” Reach out to them for their advice and expertise.
On the finance side, Sloan offered these three thoughts:
- Operations is becoming less dependent on in-house technology expertise. (You can now rent that expertise instead of owning it.)
- Financial models drive business decisions, and SaaS ties directly into a model that improves the business. Shareholders don’t really care whether IT is SaaS or in-house. ROI and RONA (return on net assets) are key, and when you have no assets, your returns are going to be higher.
- He’d really need a CIO to sell him on Redshaw’s “deep end of the pool” approach, rather than picking the low-hanging fruit.
To this last point, Redshaw argued that the key to making SaaS work is a partnership with the CFO and the entire finance team. “The CIO has to get with the CFO and talk … about the long view. ‘This is the three-year view versus the course that we’re on.’ And to do that you have to talk in the CFO language, the language of business impact.”
View the entire on-demand webcast, including Q&A with an audience of IT and finance leaders.
1 “Global Tech Market Outlook 2013 To 2014,” Forrester Research, Inc., January 2013
HP Software’s Paul Muller hosts a weekly video digging into the hottest IT issues. Check out the latest episodes.
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