Over the last 20 years, business has moved from mainframes to on-premise software to SaaS. SaaS promised a way to democratize and decentralize technology, placing more control into the hands of users and business functions. Today, technology ownership has indeed shifted from a centralized IT function to individual business units.
What we didn’t expect was how complex SaaS would become and the need for technical talent with specialized skills to manage these business systems effectively. Revenue and technology are now deeply intertwined. Here’s how our current system of ownership works, how we got to this point, and a look at the future of technology ownership.
The road to democratized software
During the 1990s and 2000s, companies implemented major on-premise software to improve their organizations’ efficiency. These tools weren’t easy to get up and running and depended on large hardware infrastructure. Implementation could take months or years to complete. The entire process, from purchasing to deployment, was mostly led by CIOs or CTOs with the aid of IT consulting firms.
SaaS came to fruition in the 2000s and quickly changed the landscape. While many IT leaders were initially against putting proprietary data into the cloud where they couldn’t see or manage it directly, the benefits soon outweighed their concerns.
Software implementation was easier than ever but it was still top down and controlled by IT leadership. All designs and workflows were developed centrally and while big problems were solved, there wasn’t any flexibility for business units.
To centralize or not to centralize
For the past 20 years we’ve seen a tug of war between centralization and decentralization for enterprise technology deployment. Centralization offers many benefits including the ability to use common infrastructure governed by one budget. With this model, IT leaders can execute a shared vision across the organization and ensure all technology is tested and approved through strict governance.
The downside of centralization is that end users aren’t involved in the decision making process for new technology which hampers adoption. The core IT team may have the right processes set up but they have no context or domain knowledge. The result is a centralized system that is too far removed from users and their business goals and objectives.
Other organizations have leaned farther towards a decentralized model. In this environment, local business units can choose, manage, and control their own systems by using the tools that serve their needs and customers. Decentralization puts decision making and purchasing into the hands of end users, increasing adoption.
While the business context is there, and the freedom of technology ownership allows teams to move faster, there are no economies of scale. Too many tools are disconnected from each other or even redundant. Technology budgets and processes take a different skill set to manage, leaving end users with inconsistent experiences.
The attempt to democratize technology left businesses in a position where sales and marketing organizations were managing product development, but without the experience that product and engineering teams crafted over many years.
Centralized skills, decentralized access
Today, sales and marketing teams have so much on their plate, but aren’t quite mature enough to handle it all. Revenue teams are increasingly becoming technology organizations, and companies will have to undergo digital transformations of their business systems to stay competitive. But with fragmented systems management, it’s hard to build the digital expertise needed to innovate.
Is SaaS too democratized?
Today, organizations use around 110 applications on average. Without central governance, this opens them up to security and regulation risks. A decentralized approach means that having many SaaS tools can increase employee productivity in the short term, but too many tools becomes unmanageable for traditional sales and marketing teams in the long term.
Procurement is also more difficult. In 2022, 34% of SaaS purchases involve line of business managers with IT leaders still the most common final decision maker. When SaaS purchasing decisions are so distributed, the software selection process adds another layer of complexity for organizations.
For business systems, democracy comes at a price. Nearly all — 99% — of IT leaders say their day-to-day operations are impacted by the pain points of managing SaaS applications. While employees are reaping the benefits of affordable and easy to adopt SaaS tools, IT teams are feeling the impact of managing hundreds of apps at once, across use cases they don’t fully understand.
Centralized infrastructure and decentralized data analytics
When organizations have isolated digital tool management across functions and regions, they often have a small team (or just one person) who’s in charge of managing each localized technology stack. No one has the bandwidth to be a specialist. Centralization enables organizations to build a team of marketing professionals who work across units and hyper-specialize in roles like lead generation, social marketing, SEO, and more.
Business systems must be centralized to get the most out of specialized technical skills. This allows for shorter development cycles and the ability to scale IT solutions quickly. Data warehousing will serve as the hub of all business decisions and requires niche skills with compliance and governance oversight.
While data warehousing is centralized, data use and access should be decentralized so teams can use company approved, best in breed tools that can be tailored to their unique needs. Teams should be empowered to use data analytics technology to meet their local goals and build customer journeys that may vary based on regional regulations and cultural differences.
The ideal balance for today’s companies is centralized architecture with agile culture.
Governance is managed centrally and technology is aligned with corporate goals. Central vision, infrastructure, implementation, and funding will benefit the entire organization.
Local control allows revenue teams to customize systems to serve the unique needs of different teams and markets. The result is increased adoption and autonomous teams that can control how they accomplish their individual mandates. Business units can even create their own instances of technology, with their own data, while the entire organization benefits from the integration of all instances into one data warehouse.
To accomplish this, business units today are hiring technical talent of their own, reducing their reliance on IT and focusing on better collaboration with them instead.
The coming digital transformation
As the revenue function becomes the focal point for technology ownership, it’s important that individual teams can be agile in their work. By improving collaboration with IT on data ownership and management, marketing and sales operations can directly influence and improve how data is accessed and utilized.
Instead of looking at past data to understand buyer behavior and campaign effectiveness, revenue teams need to use data analytics to anticipate customer needs and pain points and apply this insight to messaging around customer retention, upsells, and to identify which types of engagement are most impactful.
Low-code and no-code applications are on the horizon
Low code or no-code applications are the next step in democratizing software. These tools let business users adapt applications and systems that they already have access to, without causing disruption to IT integrity, and create workflows without having to depend on IT specialists.
Front-line employees who talk directly with customers can own and solve customer needs themselves, allowing them to act faster. Gartner refers to these business users as “citizen developers” who will have access to low-code workflow software.
Since the number of professional developers is far lower than the potential number of citizen developers, power users of business applications will make the ideal candidates for citizen developers. This movement is already underway with 41% of organizations saying that they currently have active citizen development initiatives.
Even though low-code applications will make things easier for business functions, that doesn’t mean that teams actually have the time to pursue larger projects. That’s why low-code software that’s centralized on business systems, like Salesforce, are going to be very powerful. They can enable lightweight development processes that don’t require the overhead and complexity that comes with using a centralized IT or engineering team.
So while low-code and SaaS have allowed independent functions to better manage, maintain, and own their own tools, ultimately this level of decentralization can’t act as a substitute for centralized product development processes and highly skilled technical specialists.
Lastly, enterprise guardrails will need to be mandatory to protect access to digital assets and customer or employee data. The flexibility of low code tools that are embedded in existing business systems will help increase adoption within the safeguards of IT governance. Moving forward, an organization’s ability to embrace democratized software will determine just how successful their digital transformation will be in the coming years.
What’s next?
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