The Organizational Effects of Software as a Service

Organizational subunits such as marketing, sales, and customer service, invest in software-as-a-service (SaaS) as a means to reduce information technology costs, speed time to market, gain access to new technologies, and improve application support and maintenance. For these reasons, SaaS has been characterized as a form of outsourcing, but one in which IT is losing relevancy because contracts are being executed between external application service providers and the affected subunits directly without absolute oversight from IT. Here, we argue that SaaS is not outsourcing as has been traditionally envisioned and that it will instead result in increased IT relevancy through a strategic transformation of its mission by way of the theory of organizational slack to include innovative activities that directly affect the value chain.