Forget what you know about Web services. Forget what you know about application service providers. Microsoft and Oracle are quietly building a new software delivery and management model that could dramatically change the way corporations acquire, distribute and use software.
"Our company, our entire support organization is undergoing a wholesale transformation," said Tim Chou, president of Oracle.com. "We are changing the economics of the software business."
At Microsoft, "This is about the servicification of all our software," said Sanjay Parthasarathy, vice president of strategy and business development for the .Net program. "It may not all touch the Web or be delivered as a service, but it will all be tied into services that are available any time, anywhere, on any device."
The two software giants promise that companies will be able to access software and related services on demand. Enterprises will be able to use new applications without installing and tightly integrating them by, in effect, renting — rather than buying — the management skills of a presumably more knowledgeable service provider. How this will ultimately impact price, security, service levels and bandwidth remains to be seen, but the leaders insist it is the future.
Microsoft is trying to leverage its desktop hegemony into leadership in the new era with its .Net services platform. Oracle is pushing managed services for its enterprise suite as a way to cut costs and improve the customer experience.
Although weve been hearing the buzz about software services for more than a year, a close look at whats going on at ground zero at Microsoft and Oracle indicates that software services are much more than just another option the vendors plan to offer down the road: They want to be the gatekeepers of new operating systems for the "supernet" — the interconnected network of networks that will allow enterprises to link every facet of their businesses.
"Were 100 percent convinced that all software will become a service someday," said Jeremy Burton, Oracles senior vice president of product and services marketing. "Just like water, electricity and every other network, the computer network is maturing to allow that to happen."
Across the industry, the story is much the same as the biggest software companies get down to the serious work of changing the way software is sold, delivered and used by corporate America. IBM and Sun Microsystems have announced their own plans to create service platforms, and major vendors such as Computer Associates International, SAP and Siebel Systems are also increasingly offering hosted services.