Financing IT's revival

Let's face it, not many strategic IT projects are going to get the green light in 2009. Even if you work for one of the Lucky 13 U.S. companies said to be expanding operations and staff this year, getting funding for major capital investments in new computing resources will be a tough sell even for them. For the rest of us, any new IT tools will be as scarce as hen's teeth.

Strategic IT projects can involve millions of dollars in software and hardware. If organizations don't have the money in their own coffers to fund the work, most companies, particularly small and medium-sized ones, have traditionally gone to banks for a loan. Well, a glance at headlines these days tells us that isn't happening. To the ire of many, despite billion of dollars in bailouts, banks aren't loaning those bucks back to business.

That's where SaaS comes in to save the day.

Software as a service is generally treated as a operating expense. CFOs don't need to go hat-in-hand to their banker and beg for money. With a good cash flow, the SaaS deal can be done without resorting to underwriting a capital-expense investment.

Marc Olesen, vice president of Hewlett-Packard's software as a service business, is convinced the bad climate for business loans will make it a sunny one for SaaS vendors. He claims SaaS already is outpacing the enterprise software market by three or four times "and the current economy is accelerating it faster."

Although Olesen made no such assertion, I think HP's services may get juiced even more than other cloud-based software. That's because HP's SaaS offerings target CIOs--everything from IT project and portfolio management to application development, monitoring and management.

After all, pushing for new capital to buy IT software and gear in support of business projects is going to be a tough enough sell for IT executives, getting anything other than expense dollars for their own operations will be nearly impossible. And, as I argued earlier, cloud-based services that reduce the need for IT staff inside companies will be a hot ticket in 2009-2010.

To underscore how deeply HP's management believes in Olesen's group, while the company as a whole has been engaged in a well-publicized data center consolidation program, trimming down to a mere six locations from 85, Olesen told me his SaaS arm has expanded to 80 sites worldwide. Apparently the notoriously parsimonious CEO Mark Hurd is willing to invest in SaaS. That's because he thinks you will, too.