Extract from article by Matthew Rothenberg
Peter Yared, the co-founder of Sapho, a San Francisco-based enterprise application infrastructure company, got first-hand exposure to the budgetary impact of SaaS while he was CIO and CTO of CBS Interactive. “All these SaaS bundles incur operating expense, not [capital expenses], which reflects in earnings.” Yared said as a result of committing to two and three year subscriptions from SaaS vendors instead of buying software, “Year after year, those costs went to operating expenses, not capital expenses, which allowed us to report stronger results.”
Putting costs under operational expenses also affords companies better control of technology spending across the enterprise. When companies use software running on site, it often is paid for out of departmental discretionary spending with little financial oversight. Using SaaS puts the actual software use back within the visibility of both finance and IT—and could potentially prevent untended software from becoming a liability later.