Software-as-a-service now on menu of large companies

Good security

"It's probably unfair to say [early CIO scepticism over SaaS] was people looking after their personal fiefdoms. It's fair to look at issues such as security and availability and ask questions - and these questions have now been answered. Customers eventually realised the level of security Salesforce could provide was greater than what they could do themselves."

However, other SaaS players say that smaller firms will often bypass IT bosses.

"Most of our customers are small businesses with under 100 people and don't have CIOs, but we also sell to divisions of larger organisations and government," says Really Simple Systems' Paterson. "In these, we will occasionally come across the CIO but we mostly talk to lines of business such as marketing divisions. They sometimes say, 'Don't talk to the IT people because they'll probably try and stop it'. Some CIOs are fine and say: 'This has my blessing so let's just run through the failover and security aspects and sign it off'. Most CIOs have more work than they know what to do with and this is one less project for them to worry about. Occasionally though, you see larger companies with lengthy approval cycles where the attitude is 'we paid for 20,000 licences upfront and we're not allowed to move away from the company standard'."

However, veterans of the sector say there has always been a blurred line on SaaS decision-making, while arguing that the demarcation will become clearer in the event of a macro-economic downturn.

"In my experience, SaaS has been a CIO issue for a while, or at least it has had CIO attention," says Denis Pombriant of Beagle Research, an analyst firm that specialises in the CRM segment.

"Often, a line of business will initiate the project and the line-of-business people will act as their own spokespersons, giving the impression that the CIO wasn't involved. But when you talk to the CIO in question, you frequently get a statement like 'We didn't have time to do this any other way. We were glad there was an on-demand solution for this'. Some organisations might have financial thresholds for CIO involvement - a deal bigger than X number of dollars, for example. For a long time, SaaS has been able to fly under that radar but those days are ending, especially as the economy cools and companies want to control spending."

Saaspoint's Appleby agrees that the macro-economic outlook could be a driver for SaaS.