I.T. departments can become profit centers for the enterprise

When customers are looking into a SaaS offering, they usually overlook the infrastructure that the software is running on; and for good reason: They don’t care in which platform the software runs, what kind of servers it runs on etc. as long as it performs as it is expected to. There are some SaaS vendors that run their service from owned infrastructure and some others that also receive IaaS or PaaS services from third party providers.

Which leads me to the following thought: Anyone (any I.T dept., that is) with an infrastructure robust enough to offer a good Service Level, can potentially offer and host SaaS services for new customers, outside the strict boundaries of the enterprise. 

Therefore, *any* I.T. dept. of some magnitude and organization can become a profit center for the enterprise that it belongs to. This is a new way of looking at things, especially trying to leverage the costs that an internal I.T. department incurs to the general P&L. Of course, a dedicated I.T. department cannot be developed beyond a certain point and compete with SaaS vendors that were built top-to-bottom to offer such Cloud Services, but this is not the objective. The objective is to utilize existing infrastructure, know-how and support manpower for external customers or cooperators in order to generate a new revenue stream, from a company division that is usually perceived as a traditional Cost Center.

Let’s imagine, for example, a central I.T. hub of a corporation that has built a private cloud to host Business Applications that are offered to its small subsidiaries around the country and beyond (like, say, small-business ERP). One reasonable question that can be raised is “why not offer the same software to other, similar businesses that may be outside our subsidiary structure? For example, independent dealers that offer the same products as we do”. There is a high probability that such an endeavor is successful, for many reasons, the CIO and CEO might think:

• These independent dealers do the same work as our subsidiaries, therefore what is good for us, must be good for them, too. Any customizations or parametrization of the software will probably fit them, too.
• Our know-how on resolving business issues can be used for these “external customers”, too. We can offer them this knowledge as an add-on service.
• The working hours will probably be the same, therefore we can support them in the same time frame that we support our own network. We shall use existing support staff and increase only as the business expands. Any scheduled down-time will not a problem for them as it is not a problem for us, either.
• If these external customers are also our business customers (apart from being I.T. customers), then we can build new functionality and automations between us and them, thus enhancing automation, increasing performance and reducing costs.

Technology is an enabler. If we look at things from the Application side then a carefully design application can be used from many different tenants at the same time. Looking at things from the infrastructure side, we may agree that there are cases where corporate server “horsepower” is sometimes over-budgeted and underutilized and therefore can be offered to other “tenants” too. In conclusion, offering existing applications to a wider range of customers (i.e. other than the “internal” customers) is surely technically feasible. It just needs the validation of the rest of the business stake-holders, but that’s another discussion that has to be taken into the Board Room.