While most people seems to think that software is becoming a
standardized commodity, an incredibly high number of companies will continue to
rely on mission-specific and mission-critical software made to the specs
for their industry vertical, to efficiently deliver their business.
I was visiting the CEO of a company in Europe a while ago,
and I was very impressed by their new datacenter he proudly showed me, hosting
a two-digit number of the latest IBM servers, and a rack panel with Cisco
firewalls, routers and HP switches. This company is well established and
running a nice US$10 mill. "people" operation with a fair profit for the past 20 years.
Now, it’s not within my scope to try to ruin anyone’s day, and in particular
not when someone is so happy with what they have just achieved - but I just had
to ask why he was moving into the “hardware business” like this? His company
now employs two full-time VMware network technicians.
This scenario is not made up and is not an uncommon sight.
I’m sure you know the answer to my question already- and the
heart of his lengthy and somewhat frustrated response. Situation is- their current Windows based
software system just isn’t optimized for any offsite datacenter hosting, and
due to the complexity of the total solution, no datacenter will take it on as a
standard software platform, or provide any competence for managing the
solution. Offsite maintenance of this system would therefore be a scary
scenario due to high risk of receiving a slow response and being faced with a
confusing process if anything goes wrong. Not to mention the additional cost
which incur when you’re hosting a solution which was not initially made to
support the model.
So what choices will a CEO in this situation have, as
alternatives to the decision of carrying all the overheads and risks by doing the
hardware job themselves, although it’s not his business focus?
Let’s have a closer look at what is driving technology these
days.
SaaS – “Software-as-a-Service” is one of the most important
initiatives in recent years, and rapidly changing the world of corporate
computing. What is interesting is that SaaS technology institutes the
completion of “the circle” that started with the beauty of the IBM 360 and
mainframes of the 60’s and which was later replaced by the PC and then the
distributed client/server networking model with local servers (everybody has
one) of the 80’s to 90’s. Remember how we all thought IBM where Down &
Done? Well look at those guys now..
SaaS really leads the way for mission critical applications
to move back into centralized, highly secure, and high performance datacenters,
boosting performance and competitive edge for the companies using them. SaaS
applications are developed based on a philosophy that the application
represents a set of “services”, which should be readily available to the users
on a 24/7/365 basis – no exceptions – where the user gets access to the
services he wants, when he wants, without worrying about hardware, software or
even licensing for that matter.
SaaS technology is also widely associated with the pay-per-use
business model, where there are no more “licensing” or “maintenance” fees
involved, but rather a simple sign-on and transaction-based model that will
give an efficient- and variable cost model- directly linked with the business
performance of the company which is using the service.
Globalization and integration
SaaS also makes a lot of sense when it comes to efficient
cooperation between different legal entities, be it customer – vendor or
business partners, and even cross-border businesses. As we see every day, a
massive consolidation is taking place where major players are growing, through
acquisitions, into multi-national companies. This involves different judicial
systems, different legal entities, and limitations to data aggregation.
Different systems, different time zones, and different formats- all adds to the
overall pain.
Not only mergers, but
also more loosely coupled co-operations through vendor networks are on the
increase, as many smaller companies are working hard together trying to gain
the benefit of a larger unit. Some of the challenges here are that these
companies not only don’t have the same Board of Directors, but don’t even run
on a common IT platform. Cooperation and data exchange across a variety of
different software solutions from different countries of origin means working
with a selection of vendors that most often don’t even intend to cooperate..
Now you can picture the benefits of a centrally hosted SaaS-based solution
tightly integrated across borders and legislative environments..
One of the main obstacles to the adaption of any
“next-generation technology” within an industry vertical is always that current
vendors may be somewhat resistant to stimulate that change. Reason being that
they are worried about losing their current position, the potential danger of
disturbing current revenue streams, and in the end potentially pushing their
existing customers into a new “evaluation” phase where they just may not come
out on top.. Yeah- none of us wants
that, do we?
PC, laptop, web, or even mobile phone- just hand me those
data please…
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