Four Reasons CIOs Should Still Hedge Their SaaS Bets

Software-as-a-service (SaaS) has tremendous momentum; Forrester recently projected that the market would exceed $130 billion by 2020. The benefits of SaaS are well-known and are especially important in the age of the customer, when so many of the products that firms need to win, serve, and retain customers are SaaS products. This explains why so many CIOs have embraced SaaS solutions even as they have long recognized the issues and risks that accompany SaaS products. As SaaS vendors have multiplied and matured, they have addressed CIOs' concerns about availability, performance, and customization. Progress in these areas on top of the widening adoption of SaaS solutions is starting to cause many vendors, analysts, and CIOs to view SaaS as the future for all applications. In our view, that's going too far — because SaaS apps still carry substantial risks. Indeed, these risks will only magnify as SaaS gains adoption and SaaS vendors get bigger. This report highlights why three types of risk — monocultures, monomaniacs, and monopolies — and the multiplexities resulting from managing these risks should remain at the forefront of CIOs' minds. It also outlines strategies for CIOs to keep these risks manageable.