On-premise to On-demand: Software as a Service Opportunity

There are those in the software industry that predict the death of software. Such talk is of course nonsense, at least while man strives to make ever increasing use of technology. Software is everywhere, from the cars on our streets to the phones in our pockets. The actual mortality being predicted is the business model by which the software applications that are critical to the every day operation of many businesses are being deployed and managed in-house (on-premise if you prefer) by IT departments.

The alternative to this - that the same people predict will prevail in the long term - is for these applications to become a service, available on demand, managed by experts in a central location. This is often referred to as software as a service (SaaS). So, even this is not the death of even part of the software industry but a transfer of the responsibility for managing the software and required infrastructure that drives business applications.

For the entire transfer to reach completion - which is by no means a given and often the subject of fierce debate -would take a very long time. In the data centres and computer rooms of businesses everywhere there are billions of lines of code and millions of applications which have already been paid for and for which the return on investment is still being realised.

What is true is that SaaS is increasingly being offered as an alternative delivery model for new software investments and that it is proving very popular for certain deployments of particular types of applications.

The loudest advocates of SaaS are those software vendors who are fully committed to the model. These are relatively new companies that eschew the old way of on-premise delivery for their applications by only making them available on-demand. These vendors, which include the likes of salesforce.com and NetSuite, are bullish because they feel they are going with the tide. They are committed to the direction Aspiren, a London based ISV, is a leading provider of the tide is flowing and if it were to turn they performance and information management software to the UK?s would be in trouble. But it would be hard to local and central government organisations. find someone predicting that. Aspiren was founded in 2001 and chose the SaaS route from the start over the more usual on-premise delivery for performance .

However, these vendors are a small minority. management software. It believed this would be more cost The overwhelming majority of business effective and provide it with a competitive edge. Today, Aspiren applications are delivered and managed by has over 300 customers with 1,000s of users and has been able to more established vendors who have use the economies of scale offered by SaaS to serve local historically delivered software in the government organisations that would otherwise have been traditional way - on-premise. For them there is uneconomic. a dilemma - how to protect their existing Initially Aspiren hosted the servers itself, but soon realised this business model and at the same time consider was a distraction from its core competency and turned to a if they should embrace SaaS. That choice is managed service provider - NTT Europe Online - which provides not a simple one to make; SaaS undermines Aspiren with a reliable and secure fully managed software existing business models, changing the basis of infrastructure based on IBM System-x servers running Microsoft the relationship between the supplier and user Windows Server 2003 and SQL Server. of the software.

That said, many of the tens of thousands of independent software vendors (ISVs) are starting to embrace SaaS, to the extent that arguably they now represent the bulk of SaaS delivery. The change they are making to do this is not easy, and supporting their on-premise model along side an on-demand one is challenging.

This paper is aimed at those ISVs who are in the early stages of making the move to SaaS or are yet to embrace it at all. The paper will examine the challenges involved and how these can be overcome. The total transfer of on-premise to on-demand delivery of business applications - if it ever happens - will only occur if in the coming years all the ISVs and businesses they serve see fit to embrace it.