Change is hard. Too much experience with enterprises both large and small has confirmed this to me in spades. But experience has also shown that maintaining enterprise stasis, when external market drivers suggest a different path, is incredibly dangerous, if not outright fatal. Such is the place that we seem to find the majority of the global IT service providers with respect to the very large, and growing, externality known as Software-as-a-Service (SaaS). There appears to be an almost collective confirmation bias among the service providers in viewing SaaS as, at best, a minimal threat to their business model. They shouldn’t have to be reminded that five years ago, they didn’t view the India pure play service providers as game changing competition either.
Confirmation bias refers to a type of selective thinking whereby one tends to notice and to look for what confirms one's beliefs, and to ignore or undervalue the relevance of what contradicts one's beliefs. For example, if you believe that during a full moon there is an increase in admissions to the emergency room where you work, you will take notice of admissions during a full moon, but be inattentive to the moon when admissions occur during other nights of the month. A tendency to do this over time unjustifiably strengthens your belief in the relationship between the full moon and accidents and other lunar effects.
IT service providers are struggling with understanding how their application management delivery models will be impacted when/if they integrate SaaS into the service mix. How are margins impacted? How is systems integration revenue impacted? If they don’t have intellectual property, in the form of proprietary applications, to deliver in a SaaS model, do they become expensive middlemen in the delivery model? And if they are just middlemen, do they have a future in a SaaS world? Hence, the search for validation that SaaS will not become much more than a niche service, albeit an important one.
This tendency to give more attention and weight to data that support our beliefs than we do to contrary data is especially pernicious when our beliefs are little more than prejudices. If our beliefs are firmly established on solid evidence and valid confirmatory experiments, the tendency to give more attention and weight to data that fit with our beliefs should not lead us astray as a rule. Of course, if we become blinded to evidence truly refuting a favored hypothesis, we have crossed the line from reasonableness to closed-mindedness.
As Bob Dylan sang so many years ago, “You don’t need a weather man to know which way the wind blows”. Service providers must begin to embrace SaaS as a key element of their service delivery models and their business models or prepare end up on the wrong side of a very strong, and sustained, gale.
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