The idea that computer processing has to be done on premises is beginning to evaporate. What started as a CRM driven initiative (think Salesforce.com) has rapidly turned into a torrent of interest in all things Cloud-like. For a long time our personal needs have been met from the Cloud and most of us think nothing of on-line banking, insurance quotations and airline reservations from the comfort of our homes. So why the hesitation when it comes to business applications such as accounting and ERP, asks Gary Simon, FSN's managing editor?
“Software as a Service”, the provision of software as a hosted or rented solution over the web has enjoyed mixed fortunes – not helped by the term “Software as a Service” which is meaningless to everyone except those in the know. But it is also an area that has been over-hyped and badly exploited.
FSN receives approaches by at least one software house a week that has been formed specifically to address the SaaS market or has taken an existing “on-premises” product and made it available for rent over the internet. The trouble is that the marketing hype often far exceeds the reality on the ground.
Many of the new entrants trumpet the low costs and the ease of implementation but neither is necessarily borne out by experience. A recent survey by Gartner, Inc., for example, has revealed that although software as a service (SaaS) is more mainstream and less controversial than ever before, many customers are underwhelmed by their current experience of it and sense that SaaS is not quite the panacea it often promised to be.
The survey, which was conducted in December 2008 among users and prospects of SaaS solutions in 333 enterprises in the US and the UK, found that the apparent acceptance of SaaS as a viable model has not entirely translated into satisfied users of SaaS.
“Our research findings did not exactly provide a ringing endorsement of SaaS, in fact I would go as far as to say that satisfaction levels among SaaS users are little more than lukewarm,” said Ben Pring, research vice president at Gartner. “Although macroeconomic factors would seem to favour SaaS providers, almost two thirds of respondents said that they planned only to maintain their current levels of SaaS in the next two years.”
But opinions are divided. According to an internal poll of customers, technology group SCC, part of the €3bn turnover Specialist Computer Holdings plc (SCH), has identified that businesses are increasingly turning to hosted applications in an attempt to gain fast access to affordable and best of breed technologies whilst maintaining or reducing current levels of capital expenditure.
“While the economic downturn is putting tremendous pressure on IT departments to reduce operating costs, company boards still want the latest technologies delivering improved performance and efficiencies throughout the business – leaving the CTO’s struggling between a rock and a hard place,” said Nick Martin, General Manager of Solution Architecture at SCC.
“As a consequence, we have seen a sharp rise in demand for hosted applications, cloud computing solutions and technology as a service (TaaS) - these are widely considered an opportunity to remove the barriers to affordable access.”
“With up-front capital expenditure no longer necessary and the hassle and risk of management taken away - particularly where ageing legacy systems present complex environments – companies are increasingly seeking such risk free alternatives to expensive in-house systems.”
By packaging technologies and delivering them back to the customer as a service, SCC says that a highly resilient and secure solution is provisioned at speed for a predictable and fixed price. It is also easy to add or remove technologies in line with business needs - providing flexible access to the latest solutions, at low risk.
However, the Gartner survey suggests that not everyone agrees. The research firm found that 58 per cent of organisations will maintain current levels of SaaS in the next two years, only 32 per cent will expand, 5 per cent will discontinue and 5 per cent will decrease levels.
Despite these misgivings major vendors seem undeterred by the uncertainty in the market and how they will make an ‘on-demand’ model profitable Microsoft recently announced a raft of improvements with the launch of Microsoft Office 2010. This promises “Work anywhere” capability courtesy of Office Web applications — the lightweight Web browser version of Word, PowerPoint, Excel and OneNote — that provides access to documents from virtually anywhere and preserve the look and feel of a document regardless of device.
Google too, are increasing the accessibility of their web based productivity tools through the launch of Google Chrome which may offer material competition to Microsoft’s dominance in the operating system space.
For the consumer it is good news that SaaS or cloud computing is being actively courted and legitamised by the biggest players in the industry but as far as industry is concerned several challenges remain. According to Gartner, respondents who have considered using SaaS, but decided not to, were asked what factors they considered in making the decision. Forty two percent cited high cost of service, 38 per cent said difficulty with integration and 33 per cent said the solution didn’t meet technical requirements.
These findings contradict the general impression that SaaS could help alleviate costs and also that it does not require much integration and technical requirements. So whether we are looking at storm clouds or Mares’ tails the outlook for Cloud computing appears mixed and it will be a while before the true direction of computing will emerge.
