Jimmy Song has authored BIP176 - Bits Denomination which was recently added to the BIPs repo. To put this in context, bitcointalk user ribuck first suggested the term satoshi in 2010, originally intending the unit to signify 0.01 BTC. As he recalls:

At the time, 0.01 BTC was the smallest unit that could be displayed by the user interface in the standard client, even though the protocol supported eight decimal places.