The debate around cloud computing and software-as-a-service (SaaS) has energized industry conversations on the future of software, often leading to attention-grabbing headlines and heated corporate rhetoric. Some vendors proclaim that “software is dead” and urge companies to transform their businesses to coincide with the SaaS vision or be doomed to IT oblivion. But reality presents something that is infinitely less sensationalistic and underscores that what we are witnessing in the software industry today is not a revolution, but an evolution.
Customers are most concerned with how to use software to sustain competitive advantage, align IT with the business and deliver the best experience for users without compromise — regardless of delivery option — whether that is SaaS, on-premise software or a combination of the two. That’s why this evolution of software in a services world is so important for the industry to broadly support, and why customers deserve more than all-or-nothing ultimatums.
Few would argue that the web hasn’t massively transformed our workplaces and our homes and changed how the industry builds software to deliver new experiences to users (via the PC, mobile phones, gaming/music devices, etc.) in more ways than “software in a box” ever could. But declaring game over for software, and espousing an all-or-nothing vision around computing in the cloud, is not only removed from market reality but assumes that all users are a homogenous bunch whose needs can be approximated and subsequently addressed by a single software delivery model. Few customers, if any, would disagree that having the choice and flexibility to select the right mix of delivery options is critical to their businesses. And user choice, not vendor rhetoric, must lead the way here.
It is unrealistic, if not naïve, to assume that a Fortune 500 company has the same requirements as a small business owner or a student at a university. How will these companies manage e-discovery, regulatory compliance and records management, for instance, in a pure cloud-based scenario? How will they empower their millennial workers with the best web-based social networking and collaboration technologies in the workplace but without compromising corporate data privacy and security? If you are a small business, how will your technology investments scale from “light users” and “basic computing requirements” to more sophisticated user scenarios as you grow, while still running a lean IT operation? A myopic, services-only view of the world inhibits our ability to have balanced conversations about the future of software and services, and ultimately, what is best for customers.
Users want to enjoy the benefits of both software and web-based services — the rich, dynamic editing of the PC, the mobility of the phone, and the work anywhere ubiquity of the web — combining web services, servers and client software to reap the benefits of innovation in ways that best fit their unique computing needs. Look around and you will see changes afoot in our industry; a hybrid software-plus-services computing model is already unfolding, despite what pure SaaS vendors might claim. Web-based packages like NetSuite and Zoho offer integration with Microsoft Office. Apple’s iTunes is a great example of software combined with a service. Even avid SaaS-only proponents such as Salesforce.com and Google acknowledge “offline” realities. And Microsoft is making significant investments in data centers to support the services transformation as well.
The big debate of our times is not whether it is the endgame for software, but how application vendors will meet their customers’ demands for choice and flexibility in this emerging multidevice, hybrid environment and embrace all the opportunities that software innovation — irrespective of where it resides — makes possible.
Chris Capossela is senior vice president for Microsoft’s Information Worker Product Management Group
SORRY MICROSOFT, ORACLE, SAP… SAAS IS THE REAL DEAL!
This article is a failed attempt to deny that the SAAS movement IS a revolution. In the enterprise business application software world SAAS products like Netsuite, Salesforce win over on-premise, client server (Yes, both SAP and Oracle, among others, STILL sell traditional client server applications (e.g. Oracle Demantra)) applications because of lower (if not zero) upfront investments, predictable and lower costs, reduced maintenance and newer web technologies. In the world of enterprise productivity applications like word processors, spreadsheets etc., SAAS (like Google documents) wins for the same reasons. As for issues like corporate data privacy, security, regulatory compliance, records management – these are issues that are just as challenging for on-premise, desktop apps as they are for SAAS – these are business issues that can be handled by SAAS. With regard to the hybrid model mentioned in the article, yes – companies will be forced to adopt the hybrid model since many of them have to support their older apps. I have been in the enterprise apps business for 18 years – I can see the advantages of SAAS over the older model. Of course, legacy companies like Microsoft, Oracle, SAP etc. have every reason to continue to throw F.U.D (fear, uncertainty and doubt) to thwart the SAAS movement – they have to protect their revenue streams, they are unable to innovate in the area of products and so they are trying other means to sustain their businesses – e.g., acquisitions. It’s not yet game over for them, but let’s be honest about the real deal – SAAS is winning and SAAS is a revolution!
Seriously, I don’t see anything in this article other than a rambling from a desperate company trying ways to protect their cash cow (and hence prevent innovation). If you had really wanted to convince people against cloud based computing, you should have offered logical arguments than a few ramblings.
Good article, great points. Chris is right, when saying that demands of customers will not necessarily match, whereby size is only one distinguishing feature. Others mights be the industry a company is working in or also country, where it resides. There will not by “THE cloud” solution.
While for one application/business model it might be appropriate to stick with Google AppEngine and Google APIs, for others it may be a good plan to go for a vendor like Coghead or Qrimp. If your application has the focus Web 2.0 and User generated Content, writing PlugIns for Facebook might be sufficient as well. A environment for Power users might be based around the office suites, with could be thanks to ‘Manageded Destop Services’ or Desktop-aaS also we comfortable.
Anyway Mashups will be THE hot topic, independend if online or offline.
The big questions are how far user adapt the new paradigms and how agile the solutions are and how good vender service offerings are. Success will depend on how good users and vendors will work together, because this were really the worst pains with old fashioned “break and fix” (service) mentality.
Just my 0,02€
Roland
I read this article with interest especially given how much time my firm, Treova spends consulting with mid-market businesses. Clearly SaaS has become a viable option for businesses of every size. And today, using SaaS subscriptions from companies like Salesforce, NetSuite or RightNow can provide a company with a short-term advantage. Will this always be true – absolutely not. The first mover advantage goes to early adopters who are generally startups or leading edge companies. However, once the concept becomes popular (and it already has), it is up to individual mature businesses to bring in SaaS options.
That brings the question of what is indeed best for a business – Hosted apps, licensed software, or a combination?I would suggest the latter – a combination of hosted apps that are usable in isolation (without connectivity) and with friendler user interfaces. Right now, it seems that the innovation pendelum is in the favor of hosted apps. They are very nicely exploiting the shortcomings of entrenched software – high up-front costs, need for reliable and on-going IT infratructure and support personnel, expensive customization and programming, etc.
So what happens when Bill Gates and Larry Ellison bridge these shortcomings?