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Fellow CIOs:

I am contemplating proposing a "SaaS Data Integration Surcharge" that would be a fixed percentage of the upfront/recurring costs incurred by the unit contracting with an outside vendor - for services that need data exchange in addition to simple authentication.

Do any of you have such surcharges? If yes, how much?

Thanks in advance for your help/advice.


Shashi Kaparthi, Ph.D.
Chief Information Officer (CIO)
University of Northern Iowa
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Would you charge the same fee for an on-premise campus solution? If so, then It would seem to me to make sense. If not, then you may create a backlash that would be detrimental.

Reading between the lines, what seems to be driving this is you don't have control over these purchases (by other departments) and you would like to insert yourself into the discussion earlier. 

I think we are all struggling with how to manage SaaS  but in the end this is about IT governance. I've gotten the functional owners to agree that before anything is bought it will have a business case review in front of our entire governance group. As part of that we jointly asked Procurement that all system purchases be reviewed by IT prior to purchase to ascetain if it met the requirements to have a business case and the business case was approved. 

For my colleagues, they agreed to this because they were occasionally getting impacted by decisions each of them made without understanding the inter-related consequences to other groups. We now have an agreed upon process we all live with that takes into account effort as well as business impact (as discussed by the group).

Rarely do I ask for funding to help with these systems; however as part of the business case we determine when it can be done. In the end, my goal is make certain that IT helps the university deliver efficiency & effectiveness while supporting our university goals.



I like the thinking on this and it attempts to address what I see as a pervasive issue with these third party SaaS system providers - too often their systems don't work well with our ERPs as far as data exchange/integration goes.  The sales pitch from them is always flashy and often they are meeting with directors and VPs of our departments who only see the new features, great interfaces and ease of use functionality. When asked if their system will integrate with our existing ERP their answer is always "YES!" followed but an often inaudible mumble about how your IT team can do this with a little effort and sometimes training...  That is when the warning bells go off in my head.  

I am not sure if implementing a specific charge is the answer because some of these integration efforts are pretty straight forward one-time projects while others are very complex and require constant updates as things change.  Short of charging for specific change for each SaaS integration the following may help get a handle on this and mitigate risk to the IT department and the institution as a whole:

1) Insist on a Project Charter - What is the problem the SaaS solution will solve and what solution is needed, what options are available, what are the 5 year costs, training/support requirements, etc.  This encourages departments to look at what is available from our ERP provider first (thus reducing integration issues - and they have flashy presentations too). When we look at SaaS products from our ERP provider compared with other solutions we can get a full cost of ownership and sometimes the integration costs could tip things in favor of the current ERP provider.  First and foremost, getting IT involved in the initial discussions is critical. If a department can't articulate their needs or if a vendor can't cooperate with providing 5 year costs estimates then the requesting department must do some more homework.

2) Show Me - We the SaaS vendor provide references that we can follow up on to see just how other IT departments are negotiating the integration requirements between their SaaS offering and our ERP.  We are a Ellucian/Colleague campus and there are 800 or so others using this ERP so I find it hard to believe we would be the first institution looking at a specific SaaS solution (if we are, then that tells me something as well - here come those warning bells again). Talking with other institutions will tell you about their selection process and the integration requirements.  Again, some may be very little impact and low maintenance while others are complex and high maintenance.

3) Options to Contract Out - After we have #1 and #2 figured out and we are still leaning towards a new SaaS solution then we insist that the vendor provide a quote on initial and ongoing data integration support.  My thinking is this; 1) this gives us a good idea of what they think the initial and ongoing costs will be for this; 2) we are contracting out the SaaS solution so why not look at contracting out the integration piece as well as part of that solution; 3) If the SaaS vendor doesn't want to touch the integration piece or can't point you in the right direction for more information/support on the integration piece then it may be time to look at other SaaS solutions.   

4) Sustainability - Often we find a VP or dept. head favors a solution that they used at another institution.  I would say that while the functionality they are looking for may be great, looking only at one SaaS provider is often shortsighted.  We invested in a major SaaS system under one dept. head only to have them leave after implementing it and now the new dept. head is tied into the balance of a multi-year contract.

At the end of the day, it is often the local IT staff that is responsible for ensuring the data integration processes are developed and working well with our SaaS solution but having a process in place to assess options and all aspects of the options helps minimize the risks.

I hope this helps.