Opinion: ISVs could soon begin taking the middle ground in "pay as you go" computing, by selling their software into an organization and delivering grid-computing power based on Sun's pay-per-use model.
The Information Technology Solution Providers Alliance on Tuesday announced its predictions for the top technology trends that will have the greatest impact on the SMB (small to midsized business) space, helping to keep those businesses competitive and successful in the larger business world.
Most of the trends ITSPA predicted are pretty much what youd expect: VOIP (voice over IP) because of the potential cost savings it offers, and mobile and wireless networking because of the potential for improved employee efficiency.
Server technologies get the nod because of the general necessity of having server-based networking resources available. And you cant have any list of important trends without mentioning security, since both legacy and emerging technologies face the same challenges in providing a safe and secure computing environment. One of the technologies is more of a vertical market spin, and thats RFID (radio frequency identification), which is primarily focused on the retail industry.
Which brings us to the last technology on the alliances list: utility computing. ITSPA sees the "pay as you go " computing model as the most cost-effective way for smaller businesses to acquire the computing technology they needas they need itand not be stuck with a large investment of quickly obsolescing technologies.
To ITSPA, the utility computing models most attractive features are that businesses need only pay for the technology they need; that theres no requirement to spend money on resources that wait for potential growth; and that if theres a need for more resources, you just pay for additional computing power, applications, seats, etc.
Personally, I think the most compelling point the alliance makes is that the business is no longer responsible for the software-update process. In years of dealing with corporate networks, the never-ending task of updating and upgrading software is probably one of the biggest black holes of time and resources that Ive had to deal with.
But when I hear people start talking about the "pay as you go" computer model and about buying applications and resources as needed, Im immediately reminded of the much-ballyhooed ASP(application service provider) industry of the late 1990s, which was going to revolutionize the way applications and services were delivered to the business user.
Untold millions of dollars were invested in the facilities to provide these user services, and most of these ASPs are long out of business. Those that have survived are primarily business units of software companies that already had a practical business model in the more traditional ISV mode.
To read an analysis of the utility computing model and its return on investment, click here.
Im hopeful that this time around, the vendors offering these services will take a more practical track, and there certainly seems to be a more considered approach to the pay-as-you-go model.
Oracle On Demand, the Oracle business unit that offers hosted Oracle software services, recently announced its Oracle On Demand for ISVs program, which gives smaller vendors the opportunity to build their service offerings on top of Oracles existing services.
This means that the software vendors can focus on what they do bestproviding software business solutionsrather than needing to build the infrastructure necessary to support and deliver those applications on a service-model basis.
This differs from the Sun model I talked about last week. In that case, the customer is paying for raw computing power, running on Suns (or possibly other vendors) pool of computing resources. In this model, an application still needs to be provided.
Click here to read David Chernicoffs column on Suns utility computing model, which will let users buy computing cycles on other peoples computers on an as-needed basis.
Both scenarios are very viable, and Im sure it wont be too long before we see ISVs take advantage of the middle ground, too. In this scenario, I would envision the ISV selling its software into an organization and delivering the computational power that the software needs using grid-computing power from the Sun N1 model.
In this case, the company would be purchasing the software and support from the ISV, much as they do now, with the ISV managing the software and computational capability for the customer.
From customers perspective, they get an application that they own and can rely on, while the vendor gets a steady revenue stream based on the cost of the service and support that is now absolutely required to run the application. Companies are used to paying for service and support as a cost thats separate from the expense of buying the software. In this case, they would be getting the resources to run the application as part of the package.
This isnt going to happen tomorrow, and frankly, Id like to see this business model grow slowly and not see vendors try to push it faster than it should be grown. But it does offer the potential for changing the way that ISVs do business with the corporate world.
Check out eWEEK.coms for the latest utility computing news, reviews and analysis.