Jan 11, 2009

Clouds and SaaS

While IT analysts and pundits are busy declaring SOA is dead, SOA has failed, and the downturn killed SOA, the hype of 2009 is Cloud Computing and the resurgence of Software as a Service (SaaS). (Microsoft Azure being a prime example.)

In my discussions with my corporate clients, as well as from my own extensive corporate history, I'm finding that allowing key corporate data and processes to leave the walls of the company controlled data center is the main mental barrier to SaaS and Cloud Computing. Even though companies are outsourcing business processes and the associated data that goes with them - as well as outsourcing some applications to hosting providers - the thought of deploying their applications to an amorphous cloud and depending upon the vendor to just "support and provision it appropriately" is a mental leap they're not yet prepared to make. Similarly, relying upon services that a vendor will just "support and provision appropriately" is a similar leap of faith they are not yet ready for.

While corporate management has become more and more comfortable with Business Process Outsourcing - and telling the IT guys to "just interface with them" - most IT management has not yet made a similar jump. This may be due to IT management struggling with a definition of what they provide, what is their core competency. Few companies outsource their core competency, doing so would invalidate their existence. Most IT management still defines data center operations and computing resource provisioning as part of their core competency, rather than a focus on maximizing the automation of core corporate business processes.

Being that IT environment stability is a key IT operating factor, this is understandable. The question will be whether SaaS and Cloud providers will be able to create environments of matching reliability (to traditional corporate data centers) and provide sufficient business guarantees to make savings, flexibility, and dynamic provisioning worth the risk. (What risk? The career risk to IT senior management in case of failure, or simply the risk of the unknown.)

As always, some bleeding edge companies and managers will give it a go. If it goes well, they will gain a strategic advantage. Leading edge companies will gingerly dip their toes into the water, trying a few projects and evaluating the possibilities for future potential. Mainstream companies will sit on the sidelines and wait for the early adopters to shake out the bugs, especially in 2009's tough budget environment.

Related Link: Integration is a Thorny Issue for SaaS at Mergers and Integrations by Loraine Lawson.