Old rules no longer apply in the fight for IT spending

The lines which once marked the boundaries between providers of software, hardware, services and business advice have all but disappeared.

At the end of January, IBM said its revenue from cloud computing last year was more than triple that of 2010. At the same time, the firm announced a fall in hardware revenue 7.6% in the fourth quarter of 2011 compared with the same period a year earlier.

Although a single quarter’s data from a single vendor can be a blip, signals from research organisations and other vendors suggest otherwise. The ability to pipe business applications direct to the user, where ever they are hosted, is creating a shift in the market for supplying technology and every IT professional should take note.

SaaS isn’t just a defensive play by existing software houses or an upstart challenge to the status quo, but fair game for any firm in a related space.

Accenture, the business consultancy and outsourcing firm, for example, is trying to create business units to deliver software-as-a-service where ever it sees a market opportunity globally of more than $1 billion (£634 million).

Such consultancy and outsourcing firms could be powerful enough to make use of open source software in developing their own applications and break the dependent on the dominant application vendors.

That is just one way the market is changing. Another is that some software companies are using SaaS and cloud to extract new revenues as information and data brokers.

A paper from Constellation Research says that company data, hosted by cloud SaaS providers, could provide software firms with additional revenue streams in benchmarking, trending, and prediction.

It is not just business as usual. There is an unholy bun-fight underway for a slice of the IT budget, partly driven by the recession and partly be the maturity of the SaaS model, which senior IT professionals in end-user organisations need to understand.

Consider firms outside your usual market when upgrading or buying new applications. Make sure the delivery models suits you and look at hybrid options. Look what’s in it for the supplier. If someone is making revenue from your data, make sure that’s reflected in the fees you‘re charged.


Copyright © 2012 IDG Communications, Inc.

8 highly useful Slack bots for teams
Shop Tech Products at Amazon