Software as a service (SaaS) remains a low priority for businesses despite the hype and the potential for more variable licensing costs.

SaaS is again in the headlines this week with an SAP on-demand software launch and the usual anti-software messages coming out of’s annual customer conference in San Francisco.

But half of’s 12-strong CIO Jury IT user panel said SaaS – often also called hosted or on-demand software – is either not on their radar at all or is very low priority.

Graham Yellowley, director of group technology at investment bank Mitsubishi UFJ Securities International, said: “This is not a high priority for us. We have a couple of tactically deployed SaaS systems but not for mainstream systems. This is not on the 2008 radar.”

SaaS is also not being used in any significant way at Yorkshire Water. Mike Buck, architecture manager at Yorkshire Water, said: “We’ll use it where we can see benefits and for minority applications but we aren’t planning to do anything major with this.”

Despite this lack of mainstream SaaS use by many businesses, there is still a lot of interest in the concept among CIOs.

Richard Rundle, IT director at BAA, said: “The reason is it changes the dynamic between capital funded and revenue funded investments and therefore the profit and loss profile.”

Ric Francis, operations director at the Post Office, said SaaS is a useful way of “procuring with fully variable costs”. Francis also uses SaaS as a way of supplying services to customers of his own Virtual Email start-up business.

Kevin Fitzpatrick, CIO of Sodexho UK, said SaaS is a “very viable alternative” to traditional software licensing. And Christopher Linfoot, IT director at LDV Group, said his organisation is already using it and expects to use it more.

Today’s CIO Jury was…

Florentin Albu, IT manager, EUMETSAT
Nicholas Bellenberg, IT director, Hachette Filipacchi UK
Mike Buck, architecture manager, Yorkshire Water
Colin Cobain, group IT director, Tesco
Kevin Fitzpatrick, CIO, Sodexho UK
Mark Foulsham, head of IT, eSure
Ric Francis, operations director, The Post Office
Christopher Linfoot, IT director, LDV Group
Richard Rundle, IT director, BAA
Alan Shrimpton, IT director, Avon and Somerset Constabulary
David Supple, director of IT and creative services, Ecotec
Graham Yellowley, director of group technology, Mitsubishi UFJ Securities International

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