Commoditizing an idea

Posted: February 4, 2009 in CRM
Tags: , , , , ,

 Time’s up.  It’s time for a new way to say on-demand, I mean SaaS, no I mean ASP.  Whatever.

We get a new descriptor for on-demand computing about every two or three years.  Each change in terminology brings a subtle change in the definition.  An ASP or application service provider, you might recall, was a company that provided access to conventional client-server software over a private network.  The ASP may or may not have been the software vendor and could just as easily have been a third party. 

On-demand seemed to be about delivering Web based business applications.  It was the first incarnation of what we recognize today as modern software delivery over the Internet.  Software as a service (SaaS) seemed to be a distinction without a difference.  You might want to help me out on this one but I have always seen the two as parallel ideas.

I am fascinated by the swift change of descriptors as a means of rebranding, though.  Salesforce.com is arguably the best at perceiving a trend and conceiving a new moniker.  The company has led us through the above-mentioned changes as they have suited its evolution and it has done so again with cloud computing.

Cloud computing is a distinction with a real difference that several other companies with short histories in the software business have adopted.  The cloud metaphor implies breaking the bonds of the old industry enabling customers to live their software lives free of the limitations of place bound datacenters.  Amazon, Facebook and Google have reputations for other things but are becoming known also as cloud computing companies.  But what knits them and others together is the conception first articulated by Salesforce of applications billed by the drink rather than by the bottle.

The shift to cloud computing comes at a good time.  The older terms, if not the technologies, are commoditizing along predictable lines.  Economists have long pointed out the role of commoditization in bringing new products to the masses and its function at the far end of the innovation curve.

The idea holds true even here in what amounts to a commoditization of terms more than of products.  On demand is now being used in a broader context to identify more than the multi-tenant model first popularized by Salesforce, Salesnet, UpShot and many other companies that may no longer exist as freestanding entities. 

Oracle, for example, routinely uses on-demand computing to describe any delivery of software functionality as a service.  The idea of tenancy is an option in Oracle’s world to be determined by the customer.  In some cases Oracle defines tenancy as single or many, which means that it has cleverly put an on-demand skin on its facilities management business.

Anthony Lye, senior vice president at Oracle admits to being a fast follower and the re-working of on-demand to meet his needs is a very good example.  There is nothing wrong with it though some on-demand purists in the blogosphere have been in a snit over the term’s commoditization. 

To his credit Lye correctly points out that some customers and their application needs do not fit well into the conventional multi-tenant definition.  With that Oracle is happy to fill up its data center in Texas with many blade servers to suit the demand for new solutions based on an old model.  At the same time, Oracle uses more than a name in configuring its offerings. 

While it’s true that single- or many-tenant applications may be less able to take advantage of automatic updates to a single system image, it is equally true that many customers may not care.  More to the point, today’s on-demand applications (whatever their tenancy model) borrow a lot from multi-tenant software like operating as a thin client in a browser, Ajax and XML.  These borrowings have produced an interesting hybrid that acts much like conventional software without the conventional price tag.

Hybridization and commoditization should not be causes of consternation for anyone.  They are indications of where we are in the lifecycle of an idea and a frame of reference for the innovation that is still going on at a rapid pace.  For perhaps the first time we need to think hard about the terms we use to describe the ongoing software revolution.  All of the terms are no longer equivalent.

On-demand computing has many advantages and the new definition might suit a part of the market that is underserved by what’s currently on offer.  Good for them.  From now on, though, if you want the latest and greatest in applications and connectivity you’ll need to be in the cloud.

 

Comments
  1. adamnjen says:

    Great blog! I couldn’t agree more.

    -Adam

    http://www.SalesNexus.com

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