Software-as-a-Service (SaaS) has fundamentally changed the way software is purchased and deployed within an organization. Because of the ease of acquisition and deployment, business units and individuals are now purchasing the software they need - often unbeknownst to IT.
According to research from Zylo, business units and even individual employees are responsible for a rising percentage of an organization’s technology portfolio. When looking at SaaS specifically, Zylo found that IT teams own only 23% of the organization’s applications and 27% of its SaaS spend - while business units own 66% of spend and 40% of applications. SaaS applications can be critical to driving business outcomes and innovation - but the unmanaged growth of SaaS creates uncontrolled costs and increased risk.
The goal of SaaS Management is to reduce risk from unvetted tools or technologies, improve the value of purchased software and ultimately increase the effectiveness of users who deploy and use SaaS applications.
HMG Strategy recently caught up with Eric Christopher, Co-Founder and CEO of Zylo, about the importance for technology leaders and businesses to use SaaS management platforms today.
HMG Strategy: Why has SaaS become so important for the overall enterprise architecture?
Eric Christopher: Software is the connective tissue of an organization. We use SaaS applications to multiple things across the business every day - especially with us all living in a virtual world. Software-as-a-Service is the delivery model of today and the future of every company that’s innovating.
Software is being adopted at an incredible rate and businesses are relying on it to connect and stay productive. SaaS has quickly become a business requirement, enabling employees to stay connected and productive in the world of hybrid work. The vast majority of employees’ time today is spend with SaaS applications. It’s rapidly become the environment in which we work - whether you’re connecting with customers, collaborating with colleagues or just getting stuff done. SaaS is as important as your office space. SaaS is everything now.
Talk to us about your vision for Zylo and the problem in the enterprise that you’re looking to address.
EC: In most companies, you have thousands of employees, and in many cases, they’re using hundreds of different SaaS applications to run their business. There’s been tons of efficiency and a number of things that have been gained with technology. However, it is very difficult to keep organizations on the same page when it comes to where the data lives, the security implications of using numerous third-party vendors to run core business functions or how software is distributed across an organization. You have an opportunity in the organization to really understand every SaaS business application vendor you’re using and use that to drive your strategy.
Up to this point, there hasn’t been a focused approach for establishing central visibility of an organization’s software. And once you have visibility, you can better optimize and govern those software investments.
When you think of the hybrid workplace, do you think it’s here to stay, and how will it affect organizational architecture and SaaS?
EC: It’s hard to predict what the world is going to look like in the next year or so, but it’s clear that remote and hybrid working situations will be prevalent. As a result, organizations will continue investing in tools - such as SaaS - that enable this work-from-anywhere world and allow employees to stay connected and productive.
And as we shift from office-only work environments, the software and technology you provide your employees becomes increasingly important. As mentioned before, in some ways SaaS is the new workplace environment. You’re working from your iPhone, your desktop, your iPad, etc. and SaaS is the way you get work done.
Do you have a market or an industry sweet spot?
EC: SaaS Management is applicable across industries. We believe that every company in the world will need to manage their SaaS applications. Just like if you’re going to manage sales leads, you need Salesforce or a CRM. If you’re managing your dollars, you need an ERP — it’s inevitable.
What are the SaaS trends that you’re seeing now in the market and what does the future look like?
EC: We have some industry benchmarks that we produce every year. Historically, we’ve always seen SaaS growing in your average organization 20% year-over-year. It’s climbing, and in 4-to-5 years, it will double the footprint for total software spend.
Last year, there was an increase in SaaS spending, and we’ve also seen that IT is putting more focus on software management and SaaS Management. However, SaaS is growing at such a fast rate that IT - even though they’re putting more focus on it - are actually managing and controlling less software in the organization.
What’s happening is that more employees are buying software and are not necessarily going through IT. Business software management is not only IT’s responsibility, but it’s also the business’s.
Why do you think SaaS Management is here to stay?
EC: It goes back to the idea that employees are really the ones that companies need to look to for innovation and for empowerment and getting things done for the company. There’s plenty of successful companies right now that have employee-led software purchasing.
IT will have to work with the business and partner with many people in the organization to manage the complexity of hundreds or thousands of vendors in an organization.
When you think of the role of the CIO being more critical than ever in SaaS Management, what do you think of?
EC: Security and cost containment have always been a priority for the CIO. It used to be that employee experience was part of the purview of the CIO while it was a secondary concern of the CEO. Now, it’s a number one concern across the business, and for that reason it’s important to have a strategy for software and how employees are using software. Employees and the software they use will be a big constituent of the future, and that combination will separate high-functioning, high-performing organizations from others.
I think criticality and security is constant. Where your data lives, employee productivity and experience and managing costs will always be a concern. However, the future of the employee experience and making sure employees are effective is where everything is heading.
In essence, rethinking the role of the CIO?
EC: Exactly. The majority of CIOs and IT leaders that I speak with now are embracing the idea that their job is to be a steward of the technology and leverage the business to follow the data and follow where people are finding success. From there, they can act as an advisor. It’s no longer the idea that IT is responsible for having all of the information to make the right decisions. I think that’s an exciting time to be in IT.
In various ways, the CIO role and IT are moving from the back office to the front office and now you could actually tie good software usage and performance and collaboration to revenue performance.
- Software-as-a-Service is the delivery model of today and the future of every company that’s innovating. Businesses are relying on SaaS to stay connected and are using it to run their organizations. Employees and the software they use will be a big component in the future of work.
- It’s essential for businesses to have a strategy in place for software and how their employees are using software. Thousands of employees across the ecosystem are using numerous SaaS applications without the software being managed effectively.
- CIOs and business technology leaders have an opportunity to truly understand every business SaaS application vendor the company is using and utilize those insights to drive business strategy.