Organizations Slow To Adopt SaaS Governance Policies

A survey of organizations by Gartner conducted in December, 2009 that spanned nine countries -- four in Asia/Pacific, three in Europe, the U.S. and Canada totaling 270 companies either using SaaS or expecting to use it within the next year -- found larger investments planned compared with on-premises software, but that few had set up policies to govern its use.

The number of companies that have adopted a SaaS governance policy is almost unchanged from 2008, when it was 38 percent, to 39 percent now. A governance policy or framework defines how procurement decisions are made and managed, including the evaluation and use of SaaS, what users should look for in contractual requirements, how to set up a request for proposal template, who owns the contract internally and what to do if the vendor goes out of business. "Typically they have it for premises software, but they're slow on the uptake [with SaaS]," explains Sharon Mertz, Gartner's research director for customer relationship management, who produced the survey.

Part of the reason the figure is so low has to do with how SaaS is being procured. Mertz says, "Some of the decisions are being made by line-of-business users [rather than going through the IT department]. If you have just a few people in your department to get up and running, it's pretty easy to call up a vendor and get them functional right away." This is particularly because they would be funded from operational expenditures rather than capital expenditures. Gartner is advising companies to set up such governance policies for SaaS. "Otherwise, you don't have a good process in place," says Mertz.

Almost 75 percent of respondents said their investment in SaaS would increase significantly or slightly. On-premises, 45 percent said it would increase significantly or slightly, and most of it was slightly. More than a third of the users said they had experienced issues with their SaaS deployment, with the top two issues being integration and network stability. "In the western economies, you're used to high-speed, highly available connections all the time," Mertz says. "A lot of the respondents who said they had network instability were from Asia/Pacific." However, a significant number of European users reported the same problem.

SaaS is also taking more of a role with integrators and consulting firms, which will end up changing the way companies do IT. "Some are doing no integration, but keeping themselves fully utilized doing strategy, process re-engineering, and things of that nature," Mertz explains. "Typically, that comes later. SaaS is changing the way people work, and changing the way companies address their sourcing strategies and their whole IT strategy." The result is that organizations need to make sure they have people on their IT staff who understand the contractual nuances of working with a SaaS provider. "They're different skill sets," according to Mertz.