By Greg Ballance
Why can’t the IT community stop talking about Cloud computing? Well, according to a 2010 Gartner report, in the next five years, enterprises will spend a combined $112 billion on software as a service, platform as a service and infrastructure as a service. Let’s talk about how changes in Software as a Service (SaaS) are impacting business.
For many years, there were two ways to get software: You purchased it from a vendor or you wrote it yourself. Today vendors provide an enormous range of packaged solutions, so custom development is reserved for only the most specialized functions. Buying from a vendor removes much of the effort associated with getting your solution up and running but you still need the proper physical environment for your computers, and you must configure, purchase and install network and server hardware, operating systems, etc.
One driving force behind the SaaS movement is the desire to reduce the cost and complexity of IT. Rather than creating your own in-house network, servers, and application infrastructure, you run your applications from a service provider “in the cloud.” The software runs on the vendor’s computers, is accessed via a web browser and paid for on a per-user basis. Microsoft now offers many of its products in the cloud, including Office, Exchange and SharePoint. Other well-known SaaS offerings include salesforce.com, gmail.com and constantcontact.com.
That all sounds great, but is it really that simple? The current SaaS market hasn’t reached the point where it can fully satisfy customers with significant requirements for customization or integration with other business applications or those that need to satisfy certain internal policies or industry regulations. SaaS vendors must develop solutions to these challenges if they want to broaden the opportunity to leverage cloud benefits.
While the hype will certainly outpace reality, cloud computing and SaaS are here to stay. Cloud computing is going to fundamentally change the IT landscape and the nature of the IT department. That doesn’t mean IT is dead but it does mean that businesses now have another option to consider for IT strategy, and the internal IT department must rethink how it adds value to the organization. If you’re a packaged software provider and you don’t have a cloud offering in the works, you better get moving, and fast. And system integrators must understand and be prepared to embrace how the cloud and SaaS may benefit their clients.
Greg Ballance is President and CEO at Diamond Technologies, which has been helping organizations set their strategic IT direction since 1996. For a more detailed discussion of this topic, visit www.diamondtechnologies.com and link to the Diamond Mine blog.