Software-as-a-Service Redux

Opinion: Providers of on-demand applications emerge in the wake of ASPs.

Maybe were in the dot-com-boom echo. It seems that way, as Google and Skype soar to new heights, and Microsoft attempts to counter them with its Microsoft Live plan. In September, Salesforce. com rolled out its so-called AppExchange, an online application-sharing service. Its all about software as a service—a far-from-new concept, but one whose time may finally have come.

Software as a service was the idea behind application service providers, or ASPs, many of which imploded in the dot-com bust. However, others survived to re-emerge as on-demand software providers. Often beneath the radar, and far from the hype of Web services, on-demand applications continue to be one of the quiet success stories of IT.

Vernon Harrison, process manager for IT at Gallatin Steel, of Ghent, Ky., said his use of a remote database monitoring service is saving his company a bundle.

Gallatin Steel uses six servers and 20 Oracle, Sybase and SQL Server databases in its data center, supporting its steel mill, which operates around the clock, seven days a week. The Gallatin mill is a "mini-mill" that converts 200 tons of scrap steel to steel coils every 2 hours. Keeping the steel-making operation up all the time would have meant hiring skilled database administrators to work the graveyard shift.

However, two years ago, Harrison signed on with database administration service provider DBA Direct, which has a facility in Florence, Ky., near Cincinnati, and facilities in India. Spending $70,000 on DBA Direct rather than hiring three DBAs saves about $300,000 per year. "Were able to sit back and concentrate on the business units," he said.

The databases that DBA Direct manages remotely include order-to-cash, quotations to customers, production scheduling, raw materials handling and JD Edwards financial applications. DBA Direct also manages Gallatins data warehouses.

DBA Direct tracks the databases around the clock and filters out alerts so that only serious ones are passed on to Harrison and his staff. Harrison said the experience hasnt been without glitches, but he had high praise for the providers responsiveness when problems do arise. "I call the top man, and theyre willing to fix it right away," Harrison said.

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Another user would have been unable to implement PLM (product lifecycle management) software if it were not offered as an on-demand service through IBM. Phillips & Temro Industries, of Eden Prairie, Minn., designs and manufactures heating, exhaust and other systems, mainly for auto and truck makers. The PLM software it is using as a service is Windchill, which is made by PTC Software, of Needham, Mass.

"PLM packages are difficult to get running. Its easier to work with a software package that was up and ready to run," said Brian Wicks, project engineer with Phillips & Temro.

"We have a fairly small MIS staff of five people. We couldnt justify the expense of running Windchill in-house," said David Hawkins, chief financial officer of Phillips & Temro. "Its a no-brainer for us."

The company has been using the service for only half a year and doesnt have hard savings figures, but Wicks and Hawkins both said they believe Windchill makes their companys product designers more efficient and enables them to introduce new products faster.

Out and about

A couple of leading thinkers in the multisourcing movement have authored a book on the subject that hits the shelves this month. Its titled "Multisourcing: Moving Beyond Outsourcing to Achieve Growth and Agility," by Gartner analysts Linda Cohen and Allie Young. Published by the Harvard Business School Press, the book is a primer on how to use more than one outsourcing partner at a time. The book emphasizes the importance of strategy and competent management of relationships—valuable insight regardless of the number of your outsourcing partners.

Stan Gibson can be contacted at

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