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Jun 30 2006

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ASP: threat or friend?

Many IT directors and managers regard Application Service Providers (ASPs), On-demand or Software-as-a-Service (SaaS) as a potential threat to their operations, but there are real benefits to be gained from adopting this mode of service delivery. An AECnews article, Easing IT Burdens with On-Demand Software argues the case well:

"… The initial draw of SaaS was that it gave small and mid-tier organizations access to the types of applications that were usually priced beyond their reach. Costs were spread among a broad user base, and customers with small IT staffs didn’t have to worry about maintaining, updating, and securing these complex applications. …"

The article also gives another benefit – customer participation in R&D:

"…customers all participate in making applications better…. While SaaS vendors offer economies of scale to their users, feedback and customization have end users functioning almost like an informal R&D office for the vendor."

Addressing the core concerns of IT staff, the article continues:

"SaaS’ most important incremental improvement may just be its impact on IT. The most basic IT maintenance and support issues are offloaded to SaaS vendors, who typically automate these processes.

"The CIOs we talk to say that 70-to-80 cents of every dollar spent on IT is spent on maintaining applications…. The on-demand model removes that burden, with the SaaS vendor maintaining applications, while also patching, updating, and securing them.

Additional benefits like routine backups and disaster recovery are also now part of the baseline maintenance performed by the service provider, not separate IT headaches.

SaaS vendors don’t get swamped by these maintenance and support burdens because that’s what they do. It’s their core competency, and unlike previous doomed efforts at outsourcing IT and applications, SaaS vendors are succeeding for two basic reasons: One, they focus on specific applications; and, two, they automate many common IT processes.

But won’t CIOs balk at this intrusion into their world? … The truth is that SaaS helps IT become forward-looking and strategic, rather than being forced into a firefighting mentality where they simply respond to problems."

Now, IT managers can focus on higher-level tasks, such as integrating disparate applications or achieving business goals. … highly skilled employees are no longer slaves to IT. Instead, IT is a tool that they use to achieve business objectives."

Permanent link to this article: http://extranetevolution.com/2006/06/asp_threat_or_f/

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