Sunday, December 14, 2008

Emerging Cloud utilities

One of the noticeable aspects of today's SaaS (Software as a Service) world is that most companies going this route are taking a solo approach i.e. hosting a version of their software on the web and selling direct to customers as an alternate channel.

This is a good starting place but it still creates problems for the customer, particularly if they utilise multiple SaaS solutions, around seamlessly integrating these services for use in their business. As many IT professionals already know, the integration challenge is already tough enough for applications hosted inside organisations. This new SaaS model just adds to the complexity. Granted, SaaS or Cloud solutions also create huge advantages but the industry needs to seriously consider this integration challenge.

Integration is not just about integrating web based applications using something like OpenID but also considering hybrid models where some solutions will be provided using SaaS and others will still be hosted internally.

If you agree with Nicholas Carr's viewpoint in his latest book "The Big Switch: Rewiring the World, from Edison to Google" that managing IT environments will migrate from being managed directly by companies themselves to a utility model similar to the electric grid, then these challenges around managing hybrid environments (SaaS and in-house) will only be temporary. I agree with Carr but I don't believe the switch will occur quickly. How long will it take? My guess is probably 10-20 years for a complete transformation across all industries to pick up all the laggards. Some companies will make the switch much earlier than that - in fact, there may be a competitive advantage for SME's during this period where they can gain efficiency over the big guys.

So, who will manage these new utilities? Will it be the current utilities (most likely the telecoms related ones) just expanding into this new area? Will it be the Amazon's / Google's / Microsoft's of the world? Or will new utilities emerge? The most likely scenario is probably all of the above - "horses for courses".