- John "Hannibal" Smith
So I had a really cool conversation with a long-time friend over the weekend. The friend is CFO at a Fortune 2000 company…I won’t call him out here for privacy’s sake, but you would recognize the company name.
Anyway, friend was telling me their story in going to SaaS. It’s worked out very, very well based on some decisions made early in the process. We burnt the midnight oil together working through some of those decisions, so it’s always gratifying to hear that they worked out. I thought I’d share a few here in the hopes it might help somebody reading this…
- They knew what they wanted going in…much more specifically than simply “transforming the business”. The desired end states were: a) an improvement in the speed of responding to market-driven changes, and b) a substantial reduction in IT operating expenses. That’s it.
- Their approach throughout the project was a strict application of Occam’s Razor: the solution requiring the fewest assumptions was the right one. They were passionate about keeping things simple.
- Another thing this company was very passionate about: letting go. Very little data was converted to the new SaaS system. They started with opening financial balances and historical queryable flat files from their legacy system. They took a similar approach with their HR records. Saved huge amounts of money and time in switching to SaaS.
- More on the letting go thing: they let go of all their old business processes, opting to use those baked into their SaaS applications suite. At their first Conference Room Pilot, they came out with an 80 percent fit. With careful planning and tailoring, they increased that fit to 90 percent by CRP 2. The last ten percent? Some of it they decided they didn’t need and some of it wound up on a small, on-prem server integrated with their SaaS apps…mostly at the reporting/BI level.
First, I should mention that it took this particular company four months to implement and cut over; it could have been quicker, but they invested about one-third of the project effort in “kicking the tires” before going live. Brilliant...and definitely not my idea. The testing effort turn out to be a huge help with user adoption within the company.
Second, they have reduced their IT operating costs. According to the CFO, IT operating expenses dropped by over 60 percent, mostly due to eliminating the need to maintain their in-house applications suite. Although my friend also cynically notes that most of the savings from software licensing and support fees was consumed by SaaS subscription fees: “all the SaaS vendors had already worked the numbers on that part of the deal. Even so, the savings realized through reductions in infrastructure and in-house support were a little more than we expected.”
Third, are they responding to market changes more quickly? “The jury is still out. We just don’t have enough data over a significant period of time to know for sure. But we have made a few changes based on reactions from our customers and we’re responding in days and weeks rather than months. We hope that continues."
Are there speed bumps in this story? Of course. There's always a little manure involved with the prettiest flowers. But overall, it's a pretty gratifying story. By understanding their desired end states before starting the project, by treating simplicity as a discipline, and by letting go of the past to embrace new things, they have some pretty solid early returns.
So, real life. Somebody got it right. I love it when a plan comes together. Don't you?