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Old Wolf in New Sheep's Clothing?
Many survey respondents think of SaaS in terms of the application service provider (ASP) model, which skyrocketed and then crashed so spectacularly in the late 1990s. But it was a wine shipped before its time; its success required fault-tolerant networks and clear articulation of technical responsibilities. Most midmarket firms are only now approaching this level of maturity.
"I would guess most CIOs view this as just a variation of the old ASP model," says the CIO at a midmarket insurer. "The difference to me is the pay-on-demand-and-usage aspect. In an ASP model, you pay a license fee for the application and infrastructure, and you are the only user." By contrast, he continues, "SaaS is usually a shared service that many companies use and pay as they go."
The CIO at a beverage company agrees. "SaaS is a logical evolution of the ASP model," he says, "involving the 'outsourcing' of application management to a third party via hosted solutions. [SaaS] at least loosely incorporates the elements of on-demand computing and a service-oriented architecture [SOA]."
The CIO at an entertainment company explains his view of the difference between the ASP and the SaaS model. ASPs were "more of an attempt to outsource an IT department," while SaaS elevates the importance of the IT, he says. "[SaaS] allows for a more distributed implementation of software and an opportunity to achieve economies of scale with software packages that have traditionally been too specialized. It has not reduced the need for our IT department, but rather, has made us more effective."
And the CIO at a midmarket utility adds, "The complexion changes some with Microsoft entering the picture. But after all, we are 'renting' an asset." This past summer, Ray Ozzie, Microsoft's chief software architect, identified SaaS as the catalyst for an IT services "transformation" that will change how vendors design applications and deliver them via the Web to customers. SAP, Oracle and IBM have also leapt onto the SaaS bandwagon in recent months.
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