Gartner bearish on on-demand services

Summary:The growing popularity of software-as-a-service vendors like Salesforce.com, and recent moves, like Oracle's acquisition of Siebel, are indicators that the software industry is tilting toward an on-demand future.

The growing popularity of software-as-a-service vendors like Salesforce.com, and recent moves, like Oracle's acquisition of Siebel, are indicators that the software industry is tilting toward an on-demand future. But don't expect it to take off so fast says a recent Gartner report (client reg. req.).  Despite the hype, on-demand services are likely to account for less than 10 percent of business application use through 2010, according to the research firm. The reason why, says Gartner, is that the on-demand model is not suitable for complex business uses like logistics support and order handling, and for large complex companies requiring business process support.  But the "complexity constraint bar" will rise over time since on-demand vendors can add functionality easily, said the report.  

Among the cases when on-demand services should be considered, according to Gartner, are to; bypass IT when it stands in the way of the business for any number of reasons; serve as a temporary innovation fix if functionality is not available from a large suite vendor; and when the underlying process is outsourced such as call center support applications.

Avoid on-demand services when you are dealing with transactional-intensive applications such as in a warehouse management system; when data is exceptionally sensitive, and when on-demand service providers don’t have the deep functionality or provide the level of customization required, said the report 

Gartner defines business applications on demand as, "the delivery of preconfigured business applications form a remote location over an IP network on a subscription-based outsourcing contract."

Meanwhile, a great angle at how disruptive technologies like on-demand are wreaking havoc on traditional software licensing schemes comes from Infoconomy. A column starts off by quoting Eric Rudder, senior vice president of the Server and Tools Division at Microsoft, as saying "My head hurts...my head hurts a lot when I think about that problem," in response to questions about software licensing at a press briefing in London recently. The ensuing issues covered capture well a situation going seriously pear-shaped…

Topics: CXO

About

Natalie Gagliordi is a staff writer for CBS Interactive based in Louisville, Kentucky, covering business technology for ZDNet. She previously worked as the editor of Kiosk Marketplace, an online B2B trade publication that focused on interactive self-service technology, while also contributing to additional websites that covered retail tec... Full Bio

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