However, other SaaS players say that smaller firms will often bypass IT bosses.

"Most of our customers are small businesses with under 100 people and don't have CIOs, but we also sell to divisions of larger organizations and government," says Really Simple Systems' Paterson. "In these, we will occasionally come across the CIO but we mostly talk to lines of business such as marketing divisions. They sometimes say, 'Don't talk to the IT people because they'll probably try and stop it'. Some CIOs are fine and say: 'This has my blessing so let's just run through the failover and security aspects and sign it off'. Most CIOs have more work than they know what to do with and this is one less project for them to worry about. Occasionally though, you see larger companies with lengthy approval cycles where the attitude is 'we paid for 20,000 licences upfront and we're not allowed to move away from the company standard'."

However, veterans of the sector say there has always been a blurred line on SaaS decision-making, while arguing that the demarcation will become clearer in the event of a macro-economic downturn.

"In my experience, SaaS has been a CIO issue for a while, or at least it has had CIO attention," says Denis Pombriant of Beagle Research, an analyst firm that specializes in the CRM segment.

"Often, a line of business will initiate the project and the line-of-business people will act as their own spokespersons, giving the impression that the CIO wasn't involved. But when you talk to the CIO in question, you frequently get a statement like 'We didn't have time to do this any other way. We were glad there was an on-demand solution for this'. Some organizations might have financial thresholds for CIO involvement -- a deal bigger than X number of dollars, for example. For a long time, SaaS has been able to fly under that radar but those days are ending, especially as the economy cools and companies want to control spending."

Saaspoint's Appleby agrees that the macro-economic outlook could be a driver for SaaS.

Money-saving measures

"SaaS progress is going to be driven in part by economic decisions," he suggests. "Now, especially with the economic situation the way it is, there'll be more attention on CIOs saving costs. Salesforce will be great for declining economic situations because it contributes to the top line. There's exponential return on investment."

Where next for SaaS? The movement is showing signs of going way beyond the CRM, sales force automation and security heartland areas of activity.

SuccessFactors, for example, is demonstrating that SaaS is good for gauging the performance of employees, providing opportunities for both management and staff to view their objectives.

"Our application is one where every person in the organization would use it," says Randy Womack, CIO and vice president of operations at SuccessFactors. "The only comparison is with Word or Outlook. Vice presidents of human resources are very important to us but we're typically dealing with the CXOs because they're the ones dealing directly with employee productivity. Companies that are more mature are looking at compensation, talent management and succession planning. The CIO we deal with has to wear two hats: a technology hat and a business operations hat."