Services Disruption
An area of increasing interest is that of software as a service. Formerly known as ASPs, (application service providers) and the rage of dot comers and their VC partners, ASPs had a famous flame-out, but like the Phoenix, they are rising from the ashes.
Salesforce.com is certanly getting a lot of press, but I'm seeing many others, in other application areas now getting into the mix. Oracle has been providing a hosted version of its ERP suite for sometime now and among the leading ERP players, argueably has the lead in providing a hosted solution. In the PLM space, you have small best-of-breed supplier Arena, which has put together a nice, simple solution structured to serve smaller companies and their Bill of Materials (BOM) mgmt needs. The success of Arena (which now has over 200 customers) has attracted the ire of Agile, which introduced its own hosted solution in late '04.
Key reasons driving adoption of hosted solutions is the ability to "go live" in a matter of days or weeks not months, (rapid time to value), little internal hardware needed, few internal IT resources required for long-term support and fairly low cost pricing that can be expensed. And for some, it is a great way to grow into software as needs grow as with some solution providers allow one to "buy" the software at some later date and bring it in-house.
As with any product or service, there are always drawbacks, and software as a service is no different. There is data integrity and security, which today is not that big an issue - though many bring it up. Customization is also an issue as hosted solutions typically provide a standard workflow/template for all subscribers - thus they are often ideal for commodity (not strategic, market differentiating) processes, and small companies that wish to adopt best practices of others, as theirs are still immature. Lastly, over time (5 yrs or more) the subscription fees often total up to be greater then what it would cost to bring a solution in-house.
The move to Service-oriented Architectures (SOA), use of standards, and open source, will all contribute to the growth and adoption of hosted solutions as they all support, in their own special manner, the rapid deployment and use of hosted software. These trends, combined with hosted offerings is creating a nascent market for fully hosted services built around specific business processes (business process outsourcing).
An interesting confluence of technology and services that has the potentiaal to greatly change the landscape of the software industry as we know it today.
Salesforce.com is certanly getting a lot of press, but I'm seeing many others, in other application areas now getting into the mix. Oracle has been providing a hosted version of its ERP suite for sometime now and among the leading ERP players, argueably has the lead in providing a hosted solution. In the PLM space, you have small best-of-breed supplier Arena, which has put together a nice, simple solution structured to serve smaller companies and their Bill of Materials (BOM) mgmt needs. The success of Arena (which now has over 200 customers) has attracted the ire of Agile, which introduced its own hosted solution in late '04.
Key reasons driving adoption of hosted solutions is the ability to "go live" in a matter of days or weeks not months, (rapid time to value), little internal hardware needed, few internal IT resources required for long-term support and fairly low cost pricing that can be expensed. And for some, it is a great way to grow into software as needs grow as with some solution providers allow one to "buy" the software at some later date and bring it in-house.
As with any product or service, there are always drawbacks, and software as a service is no different. There is data integrity and security, which today is not that big an issue - though many bring it up. Customization is also an issue as hosted solutions typically provide a standard workflow/template for all subscribers - thus they are often ideal for commodity (not strategic, market differentiating) processes, and small companies that wish to adopt best practices of others, as theirs are still immature. Lastly, over time (5 yrs or more) the subscription fees often total up to be greater then what it would cost to bring a solution in-house.
The move to Service-oriented Architectures (SOA), use of standards, and open source, will all contribute to the growth and adoption of hosted solutions as they all support, in their own special manner, the rapid deployment and use of hosted software. These trends, combined with hosted offerings is creating a nascent market for fully hosted services built around specific business processes (business process outsourcing).
An interesting confluence of technology and services that has the potentiaal to greatly change the landscape of the software industry as we know it today.
posted by John at
1:31 PM
2 Comments:
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