{"id":411,"date":"2006-05-31T22:39:46","date_gmt":"2006-06-01T04:39:46","guid":{"rendered":"https:\/\/www.roughtype.com\/wp\/?p=411"},"modified":"2006-05-31T22:39:46","modified_gmt":"2006-06-01T04:39:46","slug":"the_hybrid_util","status":"publish","type":"post","link":"https:\/\/www.roughtype.com\/?p=411","title":{"rendered":"The hybrid utility architecture"},"content":{"rendered":"

A year ago, when I wrote my article The End of Corporate Computing<\/a>, I made only a passing reference to the software-as-a-service movement as an example of one of the forms utility computing was taking. Despite a lot of startups in the space, and some growing success stories like Salesforce.com and RightNow, it seemed like the expansion of the SaaS model would proceed very slowly. Nervousness about entrusting sensitive data to outsiders appeared to a major sticking point for a lot of companies, one that would hinder their adoption, or even consideration, of SaaS alternatives.<\/p>\n

But that was then, and this is now. Executives’ nervousness is dissipating rapidly in the face of clearer evidence of the benefits that the SaaS model can provide – not only in freeing up capital and achieving cost savings but in enhancing flexibility, radically streamlining installation and upgrades, and even enhancing data integration through Web 2.0-style “mashups.” The SaaS tipping point is fast approaching, if it hasn’t already arrived. The latest evidence comes from the conservative consulting giant McKinsey & Company, which has just placed its imprimatur on software-as-a-service. In a new article<\/a> for the McKinsey Quarterly, McKinsey IT consultants Kishore Kanakamedala, Vasantha Krishnakanthan, and Roger Roberts write about SaaS in glowing terms:<\/p>\n

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The software-as-a-service model can cut the total cost of deploying some classes of enterprise applications by 30 to 40 percent as compared with the total cost of purchasing and maintaining them in house. Of the senior IT executives we talked with, 38 percent said that they plan to use the software-as-a-service approach during the next 12 months … Software as a service differs from the fad of the late 1990s for application service providers (ASPs) because the most successful companies offering this latest generation of hosted software have redesigned their applications for scalable delivery over the Web. In this way, these companies innovate more quickly and thus have lower total costs – and pass the benefits on to their customers. Contrary to some expectations, the acceptance of this model isn’t limited to midsize companies with understaffed IT departments; some very large enterprises are among the earliest adopters.<\/p><\/blockquote>\n

The consultants also report that “IT executives are shifting to the software-as-a-service model for some applications not only for lower licensing and maintenance fees but also because implementation is usually quicker and companies don’t have to maintain special skills in software-specific areas.” They go on to conclude that the adoption of SaaS, combined with the rapidly growing use of hardware virtualization, suggests that “a technology architecture transformation” is under way in mid-sized and larger companies:<\/p>\n

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In the past, CIOs deployed their own self-contained application architectures on their own servers and storage systems. This old model is giving way to a hybrid application architecture that combines hosted functionality with in-house applications running on consolidated and virtualized commodity servers. We believe that this transformation will drive efficiencies across the full stack, from business processes to physical infrastructure, while increasing IT’s ability to meet new demands in a rapidly changing business environment.<\/p><\/blockquote>\n

To put it another way, larger companies are reconfiguring their traditional IT assets as centralized internal utilities and then drawing in new or improved IT capabilities from outside utility suppliers such as SaaS firms. This hybrid utility architecture, as I would term it, enables much greater efficiency in running mature enterprise applications while also allowing companies to tap into the new generation of true Internet-based software. The hybrid model also provides a way for CIOs to defuse the tension between IT Departments focused on legacy applications and employees looking for new Web 2.0 capabilities – a tension that Peter Rip describes<\/a> very well.<\/p>\n

SaaS is looking more and more like the pivot between the IT of the past and the IT of the future.<\/p>\n","protected":false},"excerpt":{"rendered":"

A year ago, when I wrote my article The End of Corporate Computing, I made only a passing reference to the software-as-a-service movement as an example of one of the forms utility computing was taking. Despite a lot of startups in the space, and some growing success stories like Salesforce.com and RightNow, it seemed like […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-411","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/posts\/411","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=411"}],"version-history":[{"count":0,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=\/wp\/v2\/posts\/411\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=411"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=411"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.roughtype.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=411"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}