Trend: Software-as-a-service continues to gain momentum.
Corporate IT is being drawn to the concept of software delivered as a service and its promise of less maintenance and lower operational costs. Vendors are responding with innovations and commitments to offer the model of hosted application services.
Software-as-a-service is a model of delivering software over the Internet, eliminating the need for companies to buy, build, manage and maintain infrastructure and applications. The concept has its roots in the application service provider (ASP) revolution that fizzled in the late 1990s, but it is now white-hot with its promised IT benefits and is putting pressure on vendors of traditional shrink-wrapped software.
Two recent surveys show that corporations are betting that software-as-a-service is a part of their future.
A survey released in November by AMR Research shows that more than 78% of 500 respondents across major vertical industries and company sizes are currently using or considering software-as-a-service. Only 18% said they have no plans to consider software-as-a-service.
In an October survey of 118 IT professionals by Cutter Consortium, an IT advisory firm, 65% of respondents said they were using or considering software-as-a-service, while 35% said they are not considering it. Of the 34% who are considering adopting software-as-a-service, 82% said they plan to do it in the next six to 12 months.
Oracle is an example, having purchased J.D. Edwards, PeopleSoft and more recently Siebel and its Siebel CRM OnDemand. In October, a seven-page memo written by Microsoft CTO Ray Ozzie to company executives outlined the company's challenges and missed opportunities in regard to software-as-a-service. IBM touts itself as the on-demand company and SAP is increasing commitments to hosted services.
Consumer-focused services from companies such as Google, eBay and Amazon show the software-as-a-service model can scale. Those vendors are being followed by a growing list of smaller vendors with corporate- and consumer-focused services (see chart, above). The cost benefits of software-as-a-service also extend to these innovative start-ups.
Also, the software of today is designed with a multi-tenant architecture, which allows one application to serve multiple companies instead of an ASP hosting one copy of the application for each company. Users also can customize applications today, build entirely new applications on the hosted platform or integrate hosted applications with other applications using Web services APIs.
The near-anywhere access and speed provided by wireless and broadband has dramatically improved access and performance.
Users are not without concerns. In the AMR survey, among those using or considering software-as-a-service, the top three risks were protection of corporate data/information, putting strategic information outside the firewall and integration with on-premises solutions.
But adoption and interest levels show those concerns are fading.
Disclosure: My company markets a software-as-a-service product (Spec Book Pro).