Will New Datacenters Save My Day?

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…