by Christine Hodgson

Happy New Year for the CIO on a tight budget

Dec 29, 20114 mins
Cloud ComputingIT LeadershipIT Strategy

Some of you will be facing the new year with the challenging prospect of satisfying increasing demands for all sorts of new systems and services, not to mention the inevitable applications backlog.

And doing so within budget limits that are yet again stringent.

Despite which, there are reasons to be cheerful.

One of them is the proof we saw last year that Software-as-a-Service (SaaS) is now mature enough to play in the big league, delivering core, business-critical applications for major organisations, and at the same time helping CIOs stretch the IT pound.

SaaS was far from new in 2011.

I have mentioned it a number of times over the last three years, and outlined its benefits in terms of speed, agility, flexibility, scalability, mobility, low total cost of ownership, and ability to support innovation.

I also covered the risks of putting services out in the cloud that were hitherto kept firmly within your firewall.

My advice at the time was to start small, and to gain experience of cloud computing along with the SaaS model by experimenting with less critical niche applications, ones where disappointment wouldn’t necessarily mean high business impact.

It was in my opinion, good advice at the time.

But times change, and it is now clear that even the largest organisations should consider SaaS for at least some of their core applications.

One factor is the massive expansion of offerings, bandwidth and activity in the SaaS space, from established players such as IBM, Microsoft, Oracle and SAP.

Don’t forget services from companies with a shorter pedigree in business IT, such as Amazon and Google), not to mention the huge success of dedicated service providers such as

Even more significant for you is the sea-change that has taken place over the last year or so in the amount of documented customer experience, from UK companies winning great results from SaaS and others taking the plunge into the cloud for the first time.

Telegraph Media Group, publishers of the Daily and Sunday Telegraph, has reported on the success of it new SaaS subscription system, mentioning a positive return on our investment in months rather than years and highlighting the fact that it had achieved a state-of the-art system in just six months, plus other key benefits such as greater speed and flexibility in launching new products.

Also this year, major steel-maker Tata Steel Europe decided to move all its email systems for its 28,000 users to a new SaaS model based on Office 365.

The company was confident of saving over £1 million per year by doing so, but costs were only part of its motivation.

The opportunity to keep abreast of the latest version of the software, without a disruptive and expensive migration every few years, was also important.

Mathieu Clerkx, its Chief Information Officer, said: “This move to an enterprise ready cloud communications platform will significantly improve our ability to respond rapidly to the challenges and opportunities of today’s market place. It will also be a significant contributor to our plans to reduce our overall IT operating costs.”

The public sector too has been rapidly getting the SaaS message.

In 2012 we expect the birth of the UK Government’s G-Cloud program.

Announcing a move to messaging-as-a-service (including email), one UK police service said: “By moving to a pay-per-use structure for our messaging, we are bringing our IT costs into closer alignment with our communications needs as they evolve, and making very important sustainable cost savings at a time when saving money is vital, and with the kind of reliability, security and service quality that our officers and staff demand and need.”

The reasons why 2011 was, and 2012 will be, the year of SaaS, are many.

The sheer logic of buying only those services needed and buying them on a pay-as-you-go basis is hard to refute. This is especially the case for those many organisations foreseeing significant amounts of change in the years ahead.

Another strong attraction is to get a new system up and running quickly and without a massive upfront investment in money or scarce IT resources.

But whatever the motivation, the net result is that SaaS is a concept that has now come into its rightful inheritance as a major player on the corporate scene.

SaaS is no longer limited to niche, non-critical applications in big companies or to general applications within SMEs who either don’t have or don’t want a large in-house IT team.

It is moving into the big league, with big benefits, including big savings, on offer within short procurement and implementation timescales, and at risks increasingly seen as minimal. And that, surely, is reason alone to be cheerful.

Christine Hodgson is Chairman of Capgemini UK

Pic: sgetliffecc2.0