Oliver Günther, Till J. Winkler

• Defining the allocation of decision rights for enterprise applications is a crucial issue in IT governance and organization design. Today, emerging delivery models such as Software as a Service (SaaS) defy the notion of the internal IT department as the focal point of centralized governance. Recognizing the importance of this issue, we find that the phenomenon of 'SaaS governance' itself is not yet well understood. Based on two cases of SaaS adoption, we take a process-theoretic approach to investigate the complex interaction between factors that influence in the allocation of SaaS authority. The results suggest that some factors, such as the locus of initiative and the decision for SaaS, interact with absorptive capacities and determine the later mode of application governance at a very early stage. Thus, the initiative for introducing SaaS emerges as an important intermediate variable between the overall IT governance mode and the resulting SaaS governance outcome.