It certainly makes sense. Back in the waning days of 2011, CIO Executive Board Executive Director Shvetank Shah told us that BI projects were going to be where IT leaders focused their time, attention and money in 2012. In fact, he noted that this is what we’ll be looking at for the next two or three years. The focus on BI is part of a “megatrend” of projects shifting away from big ERP to big information.

A brief about Gartner’s study suggests this shift seems to be playing out right now. But what role will the cloud play? According to the consultancy, nearly one-third of 1,364 IT manager and business users surveyed in Q4 2011 already use or plan to use cloud-based BI tools to augment their BI functions within the next 12 months. A total of 17% said they have replaced or plan to replace parts of their core BI functions with a SaaS offering. What’s behind this? The key drivers Gartner cites are time to value, cost concerns and lack of available expertise.

So, as for the aforementioned assignment: I’ll be digging a little deeper, talking to folks who’ve already taken their BI to the cloud and if or when experts suggest you should too. One user of cloud-based business intelligence tools I spoke with today can’t imagine his company without them. Very pleased with what he and his end users are able to accomplish, he hooked me into an impromptu online demonstration. It certainly looks to be an exceptional tool for this food distribution company that does $3.5 billion in sales. But is cloud based BI right — and ready — to take the enterprise by storm? I’ll bring you some answers on SearchCIO.com next week.

Surely you’ve seen it on bumper stickers or tacked to a classroom wall — that ubiquitous inspirational utterance: “No one can make you feel inferior without your consent.”

At an event generously populated by cloud service vendors encouraging each other to ignore the CIO and sell to the business, what several CIOs said would have done the former first lady proud. According to the event’s preprinted agenda, the CIOs were there to chat about using Platform as a Service, or PaaS. Instead, they wound up championing the place of the CIO in the cloud and across enterprise IT.

In essence, they weren’t about to let the cloud services vendors make them feel inferior. Inspiring bons mots not your thing? How about a football analogy? These CIOs proved vendors can’t achieve a successful end run around your IT department if you’ve set up a strong defense. And better still, if you’ve put up enough offense to be ahead of their game already.

As with any winning franchise, staying ahead requires strong leadership and teamwork. Take Tom McLain, CIO at Old Mutual (US) Holdings Inc. His cloud computing strategy is focused on creating strong relationships with the company’s head of compliance and head of legal. As leaders, they set the ground rules for vendor interaction that are so necessary in their highly regulated industry.

There will always be “renegades” — the workers in the business who go off and find their own cloud solutions. But even in less strictly regulated spaces, there are ways to remain in control. One way is to play along with them. Larry Bolick, CIO at Boston-based Aquent LLC, noted that early adopters can actually be integral team players. Identifying those who are eager to get their hands on the latest app can be hugely important to your cloud computing strategy going forward. Bolick did this with a Skype pilot program years ago.

“Fast-forward to today, and those folks are out in the Google space trying all kinds of things,” Bolick said. Knowing they have support behind their exploration makes them less likely to sneak in their own solutions. If they discover something of potential value, he said, they bring it to him.

Another important thing to note about these CIOs: To them, “going cloud” wasn’t and isn’t drudgery, a chore or some sort of panic move. (OK, maybe there was a little panic there; the looming recession was a potent prod for many CIOs to adopt cloud services.) Rather, it was seen as a challenge, a problem to solve. And lo and behold, once it got rolling, they began enjoying the process.

This wasn’t simply creating and implementing solutions to save time and money. In fact, the act of going to the cloud was in and of itself an opportunity to be innovative. As a result, these CIOs are left with more time and tools to, yup, be innovative — and perhaps feel a wee bit superior.

Cloud computing, a delivery mode well-suited to commodity services, will change the delivery of those custom apps too. Or at least, that was the observation of Dave Hansen, a former CIO who now works for CA Technologies, in a recent discussion about the impact of the cloud on the role of the CIO.

“These are the things your industries all have very unique solutions for, that you say … no way anybody else can do,” Hansen said.

Right now, Hansen ventured, there is no such thing as a poultry IT management system — as far as he knows. But there will be one. There will be a poultry IT management system because even though the market for it is small, the cost of entry to develop software and deliver it as a service is soooo low that somebody will do it.

“CA would never ever, ever spend a dime looking at a $10 million market. It wouldn’t be worth it, given the infrastructure that we have,” Hansen said. “But two monkeys and a zebra with a couple of cases of beer would, right?”

As the cloud market matures more, those two monkeys and a zebra will be bundling software into vertical solutions and selling them as services.

Take George Brenckle, senior vice president and CIO of UMass Memorial Healthcare, the academic partner of UMass Medical School, with three campuses in Worcester, Mass., and four member hospitals in Worcester County. “Health care is a very capital-constrained industry,” he said, and he’s realized that the cloud subscription model might be a better way to balance the books while purchasing new technology.

“If I don’t have the capital to buy a product now, but [a vendor] can offer me a service model and build the infrastructure to do remote support, there’s nothing to stand in the way,” Brenckle said.

That realization came to Brenckle two years ago, but when he asked an independent software vendor (ISV) to consider a subscription model, he “got the blank look,” he told attendees at a recent Society for Information Management meeting. Last month, expecting the same blank look he got two years ago, he repeated the request “and they jumped on it,” he said, and promised to come back with a proposal.

Welcome to the age of “anything goes.” As ISVs modify their licensing models to accommodate the economic downturn, virtual use, cloud computing, and in turn, subscription-based options, negotiating new software licensing agreements has become one of the top issues for IT, experts say. And the licensing-agreement term of choice is subscription-based.

By 2014, 40% to 70% of ISVs will offer a subscription model for business software regardless of whether it resides on a public, private or hybrid cloud, according to a study of 756 IT professionals in the public and private sectors by CDW LLC, a global technology solutions provider based in Vernon Hills, Ill. That’s because it makes sense, not only from an enterprise point of view but also for the vendors, said Nathan Coutinho, virtualization solutions manager at CDW.

“In the last six months, ISVs have begun to offer subscription-based pricing models,” Coutinho said. “At some point, it will only be subscription-based, if I had to guess. It would let the ISVs develop much faster, with a steady stream of revenue because of maintenance.”

OK, now somebody please explain this to me, because I am so unimpressed. I’ve been able to chat through Gmail through years, so how is this much different? I guess the fact that you can hold a multi-person chat is cool, as is the ability to embed videos and photos directly into the chat stream (when it works). But I don’t see anything revolutionary in here. Moreover, I find it cluttered and confusing to navigate, whereas Google is usually so intuitive. (Also, a friend and I each experienced an unwanted person from our past popping up on our contact list – come on, Google, you’re supposed to be smarter than that!)

My experience has made me question Google’s long-term strategy with regard to enterprise collaboration and Google Wave. Google likes to be the standard by which other Software as a Service applications judge themselves. More and more, Google is trying to market its services, like Gmail, to enterprise organizations. From all of the hype surrounding it, I had the impression that Google Wave would make me feel like my colleague in the Midwest is sitting at the next desk over. Alas, it hasn’t, and I can’t see Google Wave, in its present iteration anyway, taking on any kind of foothold in the enterprise.

Moreover, would enterprise audiences want so much pertinent communication taking place on a platform that they do not oversee? In a new and somewhat untested Web 2.0 environment, security and privacy issues are likely to emerge, and I would anticipate compliance headaches aplenty for CIOs who have employees communicating on this platform about work-related matters.

Despite the rocky start to our relationship, I’m trying to give Google Wave a second shot, and envision ways it could carry an enterprise forward. Have you tried using Google Wave in the workplace yet? What’s your experience been? Can you see a CIO sanctioning its use as an enterprise collaboration platform in the distributed workforce?

When my colleague Christina Torode covered the Burton Group’s Catalyst conference this summer, the buzz among IT executives was that business users were purchasing SaaS services without running these agreements by IT first. As Torode reported:

“Business users tired of waiting for IT to provision a new application or service are tapping cloud providers and bypassing IT along the way, much as they have for many Software as a Service applications over the past few years. And cloud providers are not calling on the IT department, but rather going to department heads to pitch their wares.”

But if this trend makes it harder for IT outsourcing contract professionals to oversee the company’s IT assets as a whole, there is also a flip side: When business users procure their own software, it doesn’t come out of the IT budget.

During a breakout session on SaaS services and cloud computing outsourcing contracts, Forrester senior analyst Liz Herbert said that she’s heard that some IT outsourcing contract professionals would actually prefer that individual departments continue purchasing their own SaaS services for this reason. In this economy, with all budgets and spending being scrutinized so closely, why make it look like IT is doing the spending if these other departments are willing to foot the bill?

To be fair, I noticed some snickers from the IT contracting professionals in the room upon hearing Herbert’s comment, so perhaps it’s not a common point of view but I thought it worthy of mention nonetheless. Certainly, it speaks to the need for governance in IT outsourcing contracts on an enterprise-wide level – a subject I’ll be delving into in the coming week.

Has your IT organization surrendered oversight of SaaS services contracts procured by the business, or do you still intend to oversee all these IT outsourcing contracts throughout your organization?

LucidEra is in part a victim of a down economy, just as application service providers (ASPs) were in the late ’90s/early 2000s when the dot-com bust happened and VC funding started to dry up.

Like ASPs USinternetworking and Corio, LucidEra was one of the first to the SaaS BI parade. It had to lay new ground in many ways: The Web technologies that today’s SaaS vendors tap into weren’t around when LucidEra got started, so the company had a bigger learning curve and had to do lot of the development itself.

LucidEra told ThinkStrategies’ Jeff Kaplan that newer kids on the block learned from LucidEra’s mistakes and could skip many of the development cycles and bumps in the road that the company had to go through.

Back when next-generation ASPs such as Salesforce.com were getting started, they certainly didn’t try to go out and buy large data centers to essentially foot the infrastructure bill for enterprise customers, or try to retrofit Oracle’s or SAP’s licensing model to fit a multi-tenant one like first-generation ASPs had.

No, they, and other ASPs — now called SaaS vendors — learned from the mistakes of first-to-market ASPs like USinternetworking (USi), now part of IBM, and Corio, also now part of IBM.

USi and Corio came out the other side, but there are others that simply disappeared. Like ASP FutureLink, a company that many, including Microsoft — which sank $10 million into it — had high hopes for.

But all the buzz around so many of these players didn’t bring in enough customers to support them all.

Similarly, today there is a lot of interest in business intelligence and in the SaaS model. But is there enough interest to support all of the SaaS BI vendors?

Economy and customer adoption aside, LucidEra had a unique set of circumstances, including hooking its wagon to Salesforce.com. It is always risky to ride the coattails of another company, as USinternetworking and Corio found out by relying so heavily on Oracle and SAP.

And LucidEra did choose a niche in sales analytics. “One problem that [LucidEra] ran into was that not a lot of Salesforce.com customers saw the value-add of what they had to offer,” Kaplan said. “And to a greater extent, a lot of folks today think having analytics is a luxury they can do without.”

Some competitors believe that LucidEra’s downfall was its older code, developed in the late 1990s by Broadbase Software, the argument being that such code was not designed for the SaaS model. “I believe that it is difficult to retrofit a SaaS approach to an existing architecture and, unless designed as a SaaS application – multi-tenant, SOA, layered architecture than can scale horizontally – cost-effectively scaling the solution is incredibly hard,” said Wayne Morris, CEO of SaaS business intelligence vendor myDials. Morris expands on what went wrong at LucidEra on his company’s blog post.

Meanwhile, Brad Peters, CEO of SaaS business intelligence vendor Birst, chalks up LucidEra’s expected shutdown to the company’s standalone analytic software approach, as opposed to most companies’ need to analyze data from multiple sources, something that LucidEra’s software wasn’t set up for, he said.

All in all, the comments I’ve seen on blogs say this is not a sign of the on-demand model’s going away — not by a long shot — but a demise that happens naturally when a lot of companies crop up in one space. There are bound to be some that just don’t cross the chasm, as Geoffrey Moore would say.

The forum’s avowed purpose was to give a sense of what’s real now in the cloud and so it focused on the Amazon Web Services ecosystem. Several speakers spoke of “hundreds” of providers of value-added layers to the basic Amazon services, much in the form of middleware. When you peel back the layers of the onion, in many cases what you are renting has a high open source content. If enterprises have been slow to widely deploy free or freeish open source software internally, will they be quick to pay for it in the cloud just because someone has done the initial heavy lifting of configuration?

Other vendors have more novel models. Take Allurent, for example. They’ve distilled down many of the more desired features of e-commerce websites into a set of modules that run in the Amazon cloud. They do some design customization, but seemingly a lot of the time-and-money uncertainty inherent in the handoff from graphic design to software design that plagues so many Web projects has already been boiled out of the designs.

There’s also an accompanying content management system that your marketing department can use to manage sales, promotions, etc. The pages are hosted on Amazon but appear as part of your site and integrate with your e-commerce back end. My point isn’t to do a commercial for Allurent, but to point out that the cloud model creates some new ways of doing things that may well be an improvement over current ways.

Next week, VMware will shine a spotlight on the private and private/public hybrid cloud notions. This conference was more about the platform and application services that you will likely find coalescing in the cloud in the near future. If cloud flops, it won’t be for a lack of choices.

Did your vendor give you enough information up front about the potential difficulties of integrating the SaaS application with your existing applications? Were you able to find SaaS user groups to vet concerns before signing on the dotted line?

I am asking because I recently heard a panel of Boston-area IT and business executives talk about their companies’ experiences with SaaS implementations. One company had just gone live with customer relationship management (CRM ) software from Salesforce.com. Another talked about her firm’s implementation of a time-tracking and scheduling system from OpenAir Inc. The largest company there was weighing whether to go with Salesforce.com or the CRM on-demand offering from Siebel. The company had just gone through a labor-intensive migration to an on-premise Siebel CRM solution! (I can’t name names: Press is tolerated at these seminars but only as flies on the wall — ugh, not a very appetizing metaphor on the eve of Thanksgiving, sorry.)

All three sounded like happy campers (the flexibility! No capital investment! No server room!) until the moderator probed about integration challenges. Whoa, Nelly! Out came the sob stories, snags and second-guessing. The guy whose company had recently gone live with Salesforce, for example, basically said his team grossly underestimated the technical conundrums that can occur when there is a “significant difference” between the technology of the in-house database and the Salesforce.com “family” of apps and tools. He said that for all the attention they thought they had paid to integration, it wasn’t enough. In retrospect, they should have done a sample movement of data.

“We discovered, frankly too late in the project, that the original technology approach was just not going to work.” In fact, they had to switch integration tools midstream.

Asked if the snags were a matter of his company not asking the right questions or a vendor failure to understand the problems of clients, the guy politely acknowledged it was a “combination,” then pointedly added that the Salesforce.com implementers “are very immersed in the Salesforce community and how you do integration within that community, but what we were doing was going outside that community.”

The kicker? On the question of how this SaaS integration compared with other software integrations he’d done — just as hard, or less so? “I think it is substantially harder just because of some of the unknowns in the process.”

The OpenAir gal? There were problems mapping billable and nonbillable expenses to her firm’s accounting system. Manual checks were still required to make sure the coding was right. But the biggest adjustment was having to modify the firm’s business processes to fit the software. As for the big company trying to decide between Salesforce and Siebel, he’s keeping a close eye on how the CRM on-demand solution will integrate with Business Objects reports that currently feed so nicely into his company’s on-premise solution.

All three panelists said that what was really needed was for the SaaS vendors to go public with the potential problems customers will confront if they are integrating outside the family of apps pushed by the vendor. User groups would help. And the user groups should not be for just existing customers, but for prospective customers before they sign the contract.