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Ok, we're always happy to find
fellow travellers, so it was nice when Oracle's Larry Ellison got on the
bandwagon of on-demand computing. But it's worthwhile to sort through this a bit
because terms can be confusing.
When Oracle bought Siebel some direct competitors of Siebel's CRM OnDemand
product ran to the microphones to say that Oracle was going to get out of the
'on demand' business because CRM OnDemand is hosted at rival IBM's data center,
running on an, of course, IBM platform. You can read the details here.
Ellison was quick to stop the rumors by saying that Oracle is committed to
'on demand' computing, and, in fact, is moving in this direction with all of its
software. He also mentioned software as a service application vendor NetSuite as
a serious future player. But it's important to note that 'on demand' means
different things in different contexts:
- On demand software is a general class of software products that are accessed
over the internet with a web browser. Depending on the context it can include
one or both of the options below.
- ASP is the acronym for Application Service Provider, a hosting company that
signs contracts to manage a business' client server software at their facility.
Accessed through a VPN normally.
- Software as a Service, or SaaS, is software built on a multi-tenant
architecture, hosted by data center and accessed over the internet using a web
browser
So what's the fuss? I only want to point out that there is a huge difference
between an ASP and an SaaS software delivery model, though both are considered
'on demand'. Remember, when Siebel first started the 'on demand' CRM service
they were selling their own product, but they quickly realized that this was not
practical. They purchased Upshot because the product had been built for
multi-tenants. For a typical client-server application, each additional
customer increases infrastructure and maintenance because the system cannot
handle multiple accounts. Building out infrastructure for each new client make
the ASP model inefficient and unfeasible.
Software as a Service, on the other hand, built on a multi-tenant
architecture, enables the vendor to service thousands of clients and build out
infrastructure only as aggregate capacity requires. The value proposition is
obvious: Each additional customer reduces the total cost of infrastructure and
maintenance.
Unless Oracle is going to rewrite the data model and application code for the
Oracle Applications - and Peoplesoft, and JD Edwards and Siebel - to make them
multi-tenant, then they have only one choice: The ASP model. Ellison can't be
serious about the ASP model competing with Software as a Service. SaaS has a
compelling value proposition- advanced computing without an IT Staff to maintain
the infrastructure. The ASP model has never had a good value proposition - the
customer still manages the ASP, and the ASP must build out infrastructure for
each new client. |
