Beware Of The Side Effects of Software-As-A-Service

Written by Todd L. Michaud
January 13th, 2010

Franchisee Columnist Todd Michaud has spent the last 16 years trying to fight IT issues, with the last six years focused on franchisee IT issues. He is currently responsible for IT at Focus Brands (Cinnabon, Carvel, Schlotzsky’s and Moe’s Southwestern Grill).

I think that every Software-as-a-Service (SaaS) offering should come with a mandatory label that reads: “WARNING: Does not easily or cheaply integrate with existing systems. Side Effects May Include: Lack of upgrade path, poor performance and a spider-web of dependencies. Please consult with your IT professional before implementing.”

Vendors should be unable to advertise on television or in magazines without putting this warning in big, bold letters. Heck, they should make people sign a waiver. And raise their insurance premiums.

Let me explain how I arrived at such a conclusion. Have you ever experienced one of those situations that left you wondering if someone had just given you a compliment or insulted you? I had a similar feeling after spending the last four days at the National Retail Federation (NRF) Really Big Show. It seemed like the most of the technology exhibitors were offering a “completely outsourced” service. Walking around as a columnist for StorefrontBackTalk (versus as an IT person), I was operating a bit undercover. A few vendors made comments similar to: “We help our partners by offering a completely outsourced solution so that IT is no longer a bottle-neck to achieving the results they deserve.”

Whoa there, Silver; hold on a second. In every organization that I have worked for, the demand for the IT department has always been greater than the supply. No matter how large the staff or the budget, there just always seems to be more work than can be done. When many business units are looking to launch a technology, the IT department (or the steering committee) often tells them that the project will need to wait until a later date–when either the resources or the money is available. This is especially true in franchise environments, when the budgets don’t match the need because of the revenue model (I think I’ve harped on that topic enough to not go into more detail).

Have we come so far that we are now talking about IT “denying the business the results they deserve”?

I can imagine that this pitch is very well received by business units that are frustrated by not being able to implement technology that they feel will have significant impact on their business. I know that I would be extremely frustrated if another department was causing me not to achieve all the results that I could. But in the long term, these short-term fixes are only making it worse, and someone needs to make sure that our business partners know that.

As more outsourced point packages are implemented within an environment, the more the emphasis is placed on integration management. Integration is tough enough when all the systems are in-house. When you add disparate technologies (because the service providers don’t standardize on a single technology set just for you), separate companies (that now have to be coordinated with when there is any change) and feature overlap (each one of these products offers some functionality that another system already provides), it can really become a problem.

The IT team is now forced to spend more time and money on making sure that its systems all play nice with each other. Integration starts overtaking all of the other aspects of IT, and less time is spent on developing new offerings.

During a few conversations with other IT folk at the NRF show, we talked about how much time we spend managing existing systems versus implementing new ones. Some estimates were as high as 80 percent of resources and dollars are being used to maintain existing systems versus innovating and implementing new systems. That is much higher than the 50/50 or 60/40 split that everyone used to quote.

So what can we do? I strongly recommend that the IT people band together to implement this new warning label immediately. I’ll even start the petition. Be on the lookout for the “Fairness in IT Disclosure” Act and make sure that you join the cause. (Insert patriotic music here.) “I’m Todd L. Michaud and I support this message.” Please E-mail


5 Comments | Read Beware Of The Side Effects of Software-As-A-Service

  1. Alex Says:

    It is certainly very valid that integration is an important factor to consider when looking to go SaaS (and on-premise for matter). Would you consider that some systems are better suited to SaaS than others? For example, email seems to be an early suitor? For what it’s worth, I think we will see a lot of hybrid cloud/on-premise environments for some years to come; selection will depend on cost vs benefit, as the cloud is certainly very attractive and more mature for some apps today than others, particularly the customized ERP-type ones you may be referring to.



  2. Kevin Ertell Says:

    Nice post, Todd. While I understand your point, I’m not sure it’s fair to lump all SaaS models under the same umbrella. Some require more integration that others. The world is changing incredibly quickly, and keeping up with those changes requires adapting technically. Sometimes, SaaS presents the best option, even if that means more integration effort by internal teams. All that said, I agree that fully understanding the costs of any necessary integration is very important.

  3. Todd Michaud Says:

    Alex and Kevin,
    Thank you for the comments. Please don’t get me wrong, I truly believe that SaaS model, if done correctly, is the correct option in many situations.

    There are certain applications that can operate more independently than others where this type of solution will work better. My biggest point is that the “IT is a barrier” argument is not the one that you want to use when choosing a SaaS solution over something else.

    Most of the time that I am forced to push back on a project is because of the amount of integration that is needed or wanted with existing systems. In most cases, there is no “Active Directory” for corporate data. This means that data either be duplicated in these new systems, or integrations be built. Either option is not fun, and both have maintenance impacts.

    It tends to go something like this:

    We outsourced this great new text message-based marketing solution to an industry leader. It is great! Can it be integrated with our email database? And while you are at it, how about tying it into our CRM solution? It would be nice if the field team could see the text messages so they could be prepared? Can we match up the text message with our Business Intelligence to see if they are really impacting sales (and so on, and so on).

    Very few things that start simple, end simple. =)

  4. Fabien Tiburce Says:

    Todd, Asking the IT department what they think of Software-as-a-Service is akin to asking the Detroit auto-makers what they think of public transportation. Your points remain valid. SaaS is not a silver bullet but SaaS does alleviate a lot of problems that have plagued large organizations for some time. How can you pilot a new idea using your IT department when they are so overworked, the can barely keep up with the existing demand? IT departments are not going away, SaaS vendors or not. It’s just that the need for IT is evolving from that to an “implementor” to that of an “integrator”. If a company does due diligence and chooses their SaaS vendors wisely, I really believe you get the best of both worlds: speed to market, value to the business and yes integration with existing systems.

  5. Adam Says:

    Interesting insight, Todd. The SaaS industry lives by working *with* IT departments, and I think the more feedback, the better. SaaS companies are able to evolve and adapt and I think we’re going to reach a happy medium in the very near future between SaaS vendors and IT departments.


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