Service.. as a Service

In the early 1990’s, outsourcing became mainstream. It started with business critical application servers. Businesses didn’t have to have them in their office buildings anymore, but could free up expensive raised floor space and buy a resilient server park from someone else.

Then there came desktop outsourcing. You could buy a PC per persona, including an estimated number of help-tickets, printer services and fixes.

Then there was application management systems. No need to fix bugs in your applications anymore, since a service level agreement regulated upgrades, bugs and even more functionality. Gradually delivered by resources from other countries. At lower wages. At other shores. Offshoring, rightshoring, smartsourcing.

You could pay for someone to be your system integrator. But you paid for a snapshot of system integration. You still had to buy the software. To pay for the upgrades. Mind about the current version not being supported any longer, or not being compatible with the current version of other systems. You did not know if the software company would be bought or go bankrupt and the software discontinued.

Software as a Service appeared as a term in 2001. You shouldn’t have to worry about upgrades, server downtime, or expensive licenses. You could access software through a plug in the wall, like electricity, and pay for what you use, like electricity. But it’s still software.

Businesses don’t need software. They need functionality. They need to get a user authorized, to register order information, to do a calculation, to show a graph. They don’t want to worry about a product upgrade, or even know what the product name is. They just want the functionality, or service, to keep working as expected. And to define new functionality. Not to evaluate different products or solutions.

Vendors who can offer functionality as a service, that can guarantee that the interface offered will deliver results as expected, even if they had to change or upgrade products behind the scenes, answer the customer’s needs.

Cloud computing offers scalability at variable costs. It is a strong driver to enable vendors to realize functionality as a service. But they don’t today. They are offering infrastructure in the cloud, platform and applications in the cloud, but they don’t offer functionality as a service in the cloud.

When a customer can define user requirements and from these establish a set of standardized APIs or interfaces, and have these delivered as a service – a Service as a Service – that’s when customers truly can focus on their core business and let IT companies focus on theirs.

( I realize that the expression “Service as a service” has been used in other contexts – but I couldn’t help myself from using a catchy title.)

3 kommentarer på “Service.. as a Service
  1. Some good insights here. This is the direction everything is going. However, in my opinion it is going to take a long time to get there due to a number of factors:

    1) The service vendors need to accept that they are entering a market which eventually will commoditize their offerings, pressuring the margins and catering to a larger, more generic market with a lot more competition.

    2) The customers need to accept that most of their IT needs are not specific to them, and that these non-specific needs should get reduced funding (for instance through the use of commoditized services). This also has organizational consequences.

    3) The remaining development of the customer’s IT will (relative to commodities) cost a great deal more than today, which is a concept that will take some time for stakeholders to get used to. Think: getting a productivity suite for the desktop costs $10/month, so why does a bit of new functionality on our sales web cost $150000?

    4) Increased use of services will require increased spending (and focus) on integration, security and governance. This cannot easily be outsourced.

    But in due time I am sure that vendors and customers will eventually take these steps, and hopefully it will produce a number of useful standards that can further reduce the costs involved.

  2. Hanne Sorteberg sier:

    Thomas, I agree with your points, thank you for offering a larger perspective!

    1, Yes, and those who don’t quickly enough, will lose market share. This will consolidate existing vendors into large, general suppliers, and small niche players. Small, local vendors must be clear on their strategy and market position to be able to compete in this space.

    2, And it’s about time, too, that organizations focus on their core business, and organize for this, and not build large internal IT departments that does not contribute to any differentiation or competitive edge.

    3, A solution is to offer layered functionality or service -some functions on a high business level, some on a lower, «plumbing» level. There will still be in-house development on business sites, but only on the parts that are unique to this business.

    4, I think service providers need to cater to this by offering good standards and API’s as you mention (OpenID is an example), but also that there will be service providers that offer a mix of services, industry or domain specific, that offers integration, security and governance.

  3. Paul Are A Killie sier:

    Hanne,
    you have many good and valuable views in your statement.

    But do not forget that we are only in the start of the cloud computing. Cloud computing consists of technology which have been around for some time. I guess everyone remember concepts like Grid computing etc. The new with cloud is really the business model with a price/preformance ratio where consumers accepts a standard offering. This have not been true before.

    Consumers do want to buy functionality only. But functionality needs to be but in a process and therefor you need to integrate different functionality to have a business process. And that demands sharing of data. This is the next issue the technology need to solve. Many still remember when PCs came on the desks and demands to integrate their functionality with the information from the legacy system where raised.

    But cloud technology offerings brings technology (SWG and HW) to be used for explore ideas and development new solutions and test ideas which could not be done before. This will result in a flora of new services or web-services offered in the market.

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