Why your mattress should be CAPEX

As the technology train speeds up so do the opportunities and the complexity for everyone working in IT. New technology not only gives us new and cool gadgets it also unlocks a host of new forms of cooperation, new ways to arrange your organization, and new ways to access services.

Luckily our industry does not shut its eyes to its peers. On the one side IT can weave itself into the processes of every imaginable process (be it financial, operational, etc) the IT industry does not shy away from borrowing concepts already out there. Prime examples are the adoption cycles we have seen in both outsourcing and offshoring in the past thirty years and the increasing dominance of the SaaS service model in today’s market.

Earlier this year, I discussed outsourcing and what success is dependent upon; (1) know what you are outsourcing, and (2) measure what you are getting in return for your hard-earned cash.

We also concluded it is not the answer to everything.

The market is starting to realize this about SaaS as well. This is difficult because the SaaS model brings us some darn big advantages! All of a sudden, there is an avalanche of services and functionality that is made available to us that we could have only dreamed of before. It grants smaller organizations the opportunity to truly compete at a new scale, and to utilize an efficiency that used to be beholden to large enterprise corporations.

So, do the same risks we saw for outsourcing also apply here?

Well… not exactly! I would venture that the effect of the risk here is even bigger.

Recently, I was triggered by this while waiting on the metro. A large commercial poster captured my attention with bright colors and splashy letters. This simple ad featured nothing more than the picture of a mattress and the suggestion that my life would be tremendously improved if I were to lease a brand-new mattress.

This struck me as one of the worst ideas I have ever come across. 

Why? Because there are some things you should own. 

With SaaS, if you lack direction, and possibly, eventually, ownership of that which you are paying for. Not being the owner means that in a downturn (which can happen to anyone and any business) this asset can be taken away from you. I am happy to state that this is a risk you don’t want to run with any of the primary things you need to run your business.

You need to own your mattress. The availability of it should not be dependent on your future cash flow, it should be a given. This is not where you are taking entrepreneurial risks.

Back to SaaS, the same notion applies. Is it a bad idea to utilize SaaS services? Surely not. But don’t mindlessly utilize SaaS for everything you need to arrange in your organization. Everything comes with a price and SaaS is that of dependence and the promise of a future cash-out flow. The best bet for many things you want as an organization, but not your mattress.