We are seeing a lot of chatter right now in the blogosphere about the impact of the economic downturn on IT spending and strategy.  Lots of stats as to how the spending is going to change, how to invest during the downturn, and what posture will be most effective.  Some of us who have been through this before, and were in need of any significant reduction in spend have a clear answer - rip & replace!

Nothing is as compelling as economic necessity to advance change to the status quo.  In a prior post here I cover the clear advantages of moving to SaaS and open source solutions within the IT portfolio. For those who have not taken these steps, now is still a good time. What I have found in the past is that when you do the math, you can in fact lower cost by taking on a new implementation project to replace a legacy system that is expensive to maintain, even during period of tight spending.

An easy example of this was at my last company when we ripped out our project accounting solution, replacing it with a SaaS based solution, and at the same time moved the remaining financials to an on demand offering.  The cost of the implmentation project plus the first year subscription was less than the maintenance fees on the licenses and the associated DBA costs during the first year alone. There was a one time write off of the now unused portion of the legacy asset, and we were done.  Best yet, the consumers of the new solution preferred it to the legacy model, and we gained all the benefits of a focused SaaS vendor solution vs. the old platform.  Say ‘Yes’ to R&R!

 

CIO’s as Investors

CIO’s are required as a primary role to be investment managers. The company is acquiring technology assets and we carefully choose our investment strategy against a matrix of objectives. A primary objective is to select solutions which exceed or can be extended to exceed the requirements of the business, so that these solutions are flexible, extensible, and can grow with the business. At the same time we are required to invest wisely. CIO’s spend much of their time managing the selection process, managing the resulting investment portfolio, and assuring returns.  On the whole, too few CIO’s have made the switch to open source and SaaS based sourcing strategies. This latest downturn should change all that.

The Old Model

Fundamentally, the model within which these investments have been made in the past, focusing on perpetual license models, is obsolete. In good times, it is inferior simply due to the large inordinate up-front cost to acquiring technology. In an economic downturn, it’s worse than inferior, as the company finds itself with sunk costs that cannot be recovered in lean years. (more…)

 

Okay, the ubiquitous use of the term ‘cloud’ or ‘cloud computing’ is already getting annoying. It seems practically every other marketing offer, industry analyst and sales exec is adopting this nebulous term as if it has specific meaning to them. Very quickly this is squeezing the last drop out of what meaning there was to the term. I am drenched in a deluge of offers and admonitions to get ‘into the cloud’.  It’s enough to make you wish for a cloudless day.  Already the backlash has begun - just search on ‘cloud computing’ to see the griping.

The silver lining?  However the term is used, business models that allow you to subscribe to software are of great benefit to us, the consumer. (more…)

 

Ben Kepes penned a nice summary of the Office 2.0 conference and one complaint I liked is that the session on going 100% SaaS still focused a bit too much on justifying “why SaaS”.  This has been nagging at me as well lately - all the chatter about whether or not 100% SaaS makes sense, and whether or not there are 7 myths about SaaS, etc.

The Vision Thing

All the time spent debating positions which are already clear does take time away from the “vision thing”.  In fact I suppose we are in a bit of our own “silly season” in this debate about how to provision IT!  So here is the vision in my view: we are now in a position to run a reasonably sized business in many industries without building a data center and without traditional “outsourcing” of IT for that business. (more…)

 

Have been preparing to be on a panel at the Office 2.0 Conference September 5th. This looks to be an excellent place to find out more about the future of online productivity and collaboration. Our topic is “Going 100% SaaS” on Friday at 9:45 am. In preparation for the conference, I joined the panel online to work on an outline using Google Docs. Even though internet explorer failed in the middle of making my first edits, the changes had been saved when I returned via Firefox. So first impression is positive with only a few reservations until off-line processing for desktop documents is delivered - looking forward to learning more at the conference!

 

At Ingres, we have talked a lot about our strategy for delivering IT services via 100% SaaS and open source software solutions. There has been an interesting discussion on Phil Wainewright’s blog site regarding multi-tenancy and why it matters when deploying SaaS solutions. What we seek from SaaS solutions is to get out of running our own copy of a vendor’s software, so we can then focus on strategy, vendor alignment, implementation, training, and process excellence.

In order to accomplish this, we expect our SaaS vendors to manage and upgrade the environment - a shared, multi-tenant environment in every possible case. We expect them to provide the most extensible, configurable software possible so that we can tailor it to our specific use cases, but in doing so not modify core code in the application. This is how our vendors unlock the potential of the SaaS model. This is how I know they can focus on extending their own solutions, and not become buried in managing unique customer deployments. There is a difference between this approach and the ASP world and that is why the new breed of SaaS solutions will take over the applications industry in due time.