“We’ve been working with SaaS apps for the past 5-6 years. One of the early ones I remember is outsourcing our spam filtering to Postini. I remember thinking:
“There’s no incremental value to running this in house. There is no upside; only downside. How will the team driving this deliver incremental value to the business?”
Essentially when you look at each application, it’s very contextual. Does it enable you to drive sustainable competitive advantage or are the resources that you have there just managing something that is considered run-rate for your business?
Ultimately, if you look at the overall metrics for IT, one of the things we’ve focused on is our contribution to innovation vs. run rate. And I’m proud to say that this year we’ll close out with an over 60% contribution to innovation. Comparable organizations typically spend closer to 20% of their budget on innovation. I attribute this to 2 things:
- We have 26 SaaS applications. These are primarily the contextual systems in our company . The SaaS model allows us to not have to focus on any of the infrastructure. You take all of that out and you can focus on the higher-value activity.
- We have a very strong focus on enterprise architecture, and specifically our integration layer – how we move data between our systems. We don’t do point-to-point interfaces. We essentially created a data layer in our company where we’ve essentially abstracted all of the applications away. When I talk to most CIOs, they say that 30-40% of their run-rate apps budget is spent managing all of the interfaces. Every time there’s a change, new system, etc. they have to change all of the interfaces, which is essentially a hairball mess.
It also plays into the hand of what we call “the IT maturity model.” At the lowest level of the pyramid is going to be infrastructure, then applications and business process, then data and information at the highest level. When you look at this model, infrastructure and apps are being commoditized across the organization. They don’t drive a sustainable competitive advantage. So what’s beautiful about SaaS is it takes out both the applications and the infrastructure, which you’re not longer having to manage. You’re essentially managing the process and the data. I’m not saying the apps aren’t valuable. They’re valuable but they can’t create a sustainable competitive advantage because most implementations are essentially vanilla between organizations. You need to have good process and execution, but the application itself doesn’t create the next level of value. Where that comes from is the data and that’s what we believe is most important. The SaaS model has been a great help in our ability to deliver data to the business that is timely, relevant, and trustworthy.”
Thanks Tony! In my final post in this interview series, we’ll talk more about the role of cloud integration and how to measure project success. If you’re interested in learning more about this topic, be sure to check out these sessions at Informatica World 2010:
- Secrets of SaaS Application Integration: Network Solutions and Janus Capital Group Make the Most of Salesforce.com
- Self-Service Data Integration: Perspectives on Informatica Cloud from Toshiba America Business Solutions and HealthDetail
- Cloud Data Integration and Data Quality: Extending the Informatica Platform to the Cloud
- Data-as-a-Service: Revolutionizing Business Applications
If you haven’t already registered for the conference, be sure to do so today. See you in November!