IT Bought by the SipBy Lawrence Walsh | Print
Hardware and software sales models are breaking down at an increasingly rapid rate. What could replace it is a hybrid model of on-premise hardware and cloud-based management that's bought and paid for by the use and not the license.
Here’s an interesting factoid: India has more middle-class citizens than the United States has workers. India, one of the fastest growing economies, will one day even surpass China in economic strength, and is building its entire economy of the future on predominantly white-collar, innovative technology jobs.
But India is still largely a third-world nation. Despite access to vast amounts of technology and having an abundant of IT talent in its population, the general India economy subsists on what we would consider antiquated technologies and applications. Simply put, the majority of India’s vast sea of small and midsized businesses cannot afford the applications that we take for granted in the United States and Western Europe.
Tata Consulting Services is looking to change that equation through a hybrid of managed services, software as a service and on-premise hardware. It’s calling it "IT as a service," or an IT business solution set in a box. The "set" will contain all the applications and hardware needed by small business to operate, and it’s provided on an as-need, as-used pricing model. Providing the remote management capabilities is Kaseya, a leader in remote monitoring and management and automation technologies.
The concept of a complete offering has been around for several years. In 2002, Symantec introduced the first unified threat management (UTM) appliance – the Security Gateway. In 2007, SAP released its own complete data analytics in a box solution. And, more recently, IBM released Cube, a small business appliance that includes e-mail, calendaring and Intuit financial management.
What separates them from the Tata model is the inclusion of a managed service or a software-as-a-service component.
What Tata is trying to achieve is increasing small business access to advance technology by decreasing cost. The mix of on-premise technology with a managed service and flexible pricing might do for the technology in the small business market what micro-lending did for entrepreneurs in emerging markets. Tata estimates the market for such technology in India is close to $10 billion. If the model proves successful, you can bet that it will find its way to the United States.
"This industry is going to grow up in a hurry," says Kaseya CEO Gerald Blackie, who believes more pay-as-you-go computing models will take over the market. And there’s good reason for it. Software remains too expensive for the mass market. Too many software licenses go wasted by businesses who must buy in bulk only to have CDs sit on a shelf. And applications go underutilized as users rarely tap all of the functionality.
"We have got to think of ways to make all of this easier," Blackie says.
We may not have to wait for Tata to prove its model in India or for IBM to add managed services to its Cube offering. There are already offerings that are entirely cloud-based that are either rolling up or rolled up into a virtual IT solution set.
Google recently took the wraps off Wave, a reimagination of collaboration applications. Google project leader Lars Rasmussen started the ambition project by asking a simple question: What would e-mail look like if it were invented today? The result of that question is a new service that rolls up e-mail, instant messaging, wikis, blogging, calendaring and social networking into a new, single pane of glass that’s delivered through the cloud.
Several managed service and software-as-a-service vendors have started looking at tackling the anticipated problem of "services sprawl," or the proliferation of multiple services to the point in which the cloud-based applications become unmanageable. Vendors such as Microsoft and Novell are already thinking about ways to bring these disparate applications under one portal, giving users more control. Perhaps that meta-portal could look something like the aggregator applications for social networks, such as TweetDeck for Facebook and Twitter.
The point is the conventional hardware and software sales models that have worked well for the technology channel for decades are breaking down rapidly. Solution providers should study – and perhaps contribute – to the changing models to ensure they maintain a role in the services new world order. Otherwise, the IT as a service may not only replace the data center, but also the solution providers that support it.
Lawrence M. Walsh is vice president and group publisher of Channel Insider. Read his research reports at [CI] Perspectives.