Friday, December 22, 2006

Broadly Used Consumer Technologies Driving IT?

"Stuff" from another world - Image Credit: The Economist

Broadly Used Consumer Technologies Driving IT?

"Off the shelf/over the portal" applications made easy ... too easy.

A contributor to SlashDot - fiannaFailMan writes to point out The Economist's reporting on the way consumer-driven software products are increasingly making their presence felt in the corporate world. Some CIOs are embracing the influx while others continue to resist it.

Excerpts from an article in The Economist -

Work-life balance
From The Economist print edition - Dec 19th 2006 SAN FRANCISCO

IN OCTOBER, shortly after taking over as head of information technology (IT) at Arizona State University, Adrian Sannier gave the nod to his contact at Google, the internet giant known for its search engine, and with one flick of the proverbial switch 65,000 students had new e-mail accounts. Unlike the university's old system, which stores e-mails on its own server computers, the new accounts reside on Gmail, Google's free web-based service. Mr Sannier is not forcing anybody to change but has found that the students, many of whom were already using Gmail for their private e-mail, have been voluntarily migrating to the new service at a rate of 300 an hour. Crucially, they can take their "asu.edu" e-mail addresses with them.
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For Mr Sannier, however, a bigger reason than money for switching from traditional software to web-based alternatives has to do with the pace and trajectory of technological change. Using the new Google service, for instance, students can share calendars, which they could not easily do before. Soon Google will integrate its online word processor and spreadsheet software into the service, so that students and teachers can share coursework. Eventually, Google may add blogs and wikis - it has bought firms with these technologies. Mr Sannier says it is "absolutely inconceivable" that he and his staff could roll out improvements at this speed in the traditional way - by buying software and installing it on the university's own computers.

In the past, innovation was driven by the military or corporate markets. But now the consumer market, with its vast economies of scale and appetite for novelty, leads the way. Compared with the staid corporate-software industry, using these services is like "receiving technology from an advanced civilisation", says Mr Sannier. He is now looking at other consumer technologies for ideas. He is already using Apple's iTunes, a popular online-music service, to store the university's podcasts.

Mr Sannier is ahead of his time because most IT bosses, especially at large organizations, tend to be skeptical of consumer technologies and often ban them outright. Employees, in return, tend to ignore their IT departments. Many young people, for instance, use services such as Skype to send instant messages or make free calls while in the office. FaceTime, a Californian firm that specialises in making such consumer applications safe for companies, found in a recent survey that more than half of employees in their 20s and 30s admitted to installing such software over the objections of IT staff.

Executive toys
Consumer technologies such as IM usually make employees more productive, says Kailash Ambwani, FaceTime's boss, so IT bosses should concentrate not on stopping them but on making them secure. In the case of IM and some kinds of file-sharing, the risks are that viruses or spyware could come into the corporate network from the outside, or that employees could ship vital information outward.

With Google Apps for Your Domain and other software services that are accessed through a web browser, the security issues are more subtle. Since the software and the data reside on the service provider's machines, the danger is of losing control of sensitive data, which is now in somebody else's hands. Most IT bosses find this scary. Not so Mr Sannier. He remembers a picture that Google showed him of one of its data centres burning to the ground; it looked awful. The point, however, was that no users of Google services anywhere even noticed, because Google's systems are built to be so robust that even the loss of an entire data centre does not compromise anybody's data.
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This trend could cause problems for traditional software firms such as Microsoft, Oracle and SAP. Already, start-ups such as Salesforce.com and NetSuite provide "software as a service", supplying sales-force automation, accounting, payroll and other features via the web. (Marc Benioff, the founder of Salesforce.com, had the idea for his firm while browsing on Amazon's online store one day. Why, he wondered, could business software not be delivered the same way?) Other firms, including Google, provide web-based e-mail, word processing, spreadsheets and databases.

Big companies will probably keep "mission critical" systems in-house. But as everything else migrates to web-based services, software will increasingly resemble the web technologies of the consumer market, says Mr Benioff. Those enterprise firms, such as his own, that follow the lead of consumer-oriented websites will do well in this environment, he argues.

Security concerns, Mr Benioff implies with a wink, are red herrings thrown by ageing IT bosses trying to justify their salaries.
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This comment found in reaction to the Slashdot posting -

I can see many companies might have issues with the security of their documents or data being held by 3rd party companies but once that hurdle has been jumped it seems to me to make sense so long as you (the company) can still have the same control you would were you hosting the service yourself.

Really, this is just outsourcing particular aspects of your business to specialists which is something a lot of companies now have a lot of experience in.

For example, the company I'm currently working for - develop software for their own warehouses and distribution network because the success of this directly affects their ability to compete in the market - but they also have a team of people managing their mail servers and providing support for office applications which they could certainly benefit in not doing themselves provided the alternative was cheaper and as effective.

1 comment:

Sharad Sharma said...

There is no doubt that SaaS is becoming part of the mainstream. Salesforce.com hit $500m annual revenue run-rate in the 2nd quarter of 2006. On the other end of the spectrum, as this Economist article points out, consumer-oriented software is going business class and is displacing the old work horses in large enterprises.

Ultimately it will not be about replacing horse carriages by cars (although that will happen), but about making a Model T affordable to a whole new class of buyers. I believe that the focus in SaaS will gradually move away from selling to large and medium enterprises to selling to networks of micro-firms. It will be about market expansion, not displacement. Growth, innovation and value creation will happen at this new edge.