Flexible Approaches To Software Delivery Will Ultimately Win The Day With Users
The important thing to remember is that the ASP model, also referred to as the software-as-a-service approach, is nothing more than a delivery vehicle. As such, solution providers need think through when to apply the model and how it should be linked with other software delivery mechanisms.
To really understand what is driving the burgeoning interest in software as a service, it's important to know the customer's pain points. The thing customers are most tired of is being required to invest a massive amount of capital in a speculative application that may or may not deliver some meaningful ROI.
To mitigate this risk, IT organizations are attracted to the idea of paying a subscription fee to test the value proposition of an application hosted on a remote site. Not only does this minimize the job-termination risks associated with failure, it also gives customers the ability to shop around.
Where it all goes wrong is when they commit to ASPs that only have one delivery model. As any customer becomes more involved with an application, two things invariably happen. First, over time, it becomes less expensive to host the application internally than it does to continue to pay per-user service fees over multiple years. And second, the application becomes more strategic to the company; the more strategic it becomes, the greater the need is to customize it.
Alas, some purveyors of externally hosted software services do not allow a customer to customize the application or to transfer software to internal servers when the costs of renting it ultimately exceed the costs that would be paid if the software were running on an internal data center. Furthermore, as the strategic value of the application increases, the customer's inability to tightly couple an externally hosted CRM application with an internal supply-chain application becomes problematic.
Fortunately, an increasing number of software vendors are partnering with IBM, Sun Microsystems and Hewlett-Packard on an approach that lets customers initially run applications as a service hosted by those vendors and then later enables them to transfer the applications to an internally hosted model when cost and customization requirements make sense.
For VARs, this means the definition of a pilot project is changing: Customers are renting applications to assess their real value before committing to internal deployments. This is fundamentally changing the sales process for solution providers in terms of how they initially engage customers.
But any software application vendor that espouses externally hosted applications as the be-all and end-all of computing is doing a disservice to the customer by limiting their options. The simple fact is that the vendor is evangelizing a business model that masks a hidden agenda designed to lock customers into a long-term subscription service.
What VARs need to do is partner with application vendors that embrace software as a service to reduce the initial cost of adoption and narrow the time it takes to attain the promised ROI. But none of that should come at the cost of compromising the customer's ability down the road to reduce long-term costs by deciding to run the application internally or, better yet, to gain a competitive edge by customizing the software. Anybody who tells them anything different is simply running a game on them.
ROBERT FALETRA is on vacation and will return next week. Meanwhile, MICHAEL VIZARD, editor in chief of CRN, wants to know your thoughts. He can be reached at (516) 562-7477 or via e-mail at [email protected].