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The rapid pace of technological innovation, combined with today’s turbulent economic environment, is fundamentally changing the competitive landscape of the IT industry. In turn, corporate decision-makers are being forced to reassess their sourcing strategies to generate greater value from their IT investments.
The most recent sign of the times is the European Commission’s approval of Oracle’s acquisition of Sun Microsystems. Now, the second largest software vendor is also a major hardware vendor as well.
But, this isn’t the only major change in the IT world. Last year, Cisco Systems announced that it is attacking the data center with its new Unified Computing System of virtualized servers. In response, HP acquired 3Com to fortify its networking capabilities. It also acquired EDS to strengthen its competitive position against IBM, which prompted Dell to acquire Perot Systems to give it a stronger service capability.
All these moves are aimed at convincing CIOs, and the broader CXO suite, within large enterprises as well as small- and mid-size businesses (SMBs) that these vendors can serve as their strategic (i.e., sole) source of hardware, software and services to meet their corporate needs.
But, we all know that turning to a single source to satisfy all your IT needs is fraught with potential problems. First of all, none of these players will ever get all the pieces of their corporate portfolios to work together “seamlessly.” Instead, it will probably take a lot of effort to get them to work together at all. This is why IBM’s services business has been its most important revenue engine for over a decade. It’s also why HP and Dell are trying to emulate the IBM services model.
Secondly, we know that becoming overly dependent on a single source puts a company in a vulnerable position. No one wants to be at the mercy of a single supplier.
If today’s competitive jockeying is making you anxious, it may be a good time to take a different path to meet your IT/business objectives and take a serious look at cloud computing alternatives. Cloud computing can help you escape the dangers of today’s IT industry consolidation.
Cloud computing’s selective outsourcing or ‘out-tasking’ service delivery model, along with its pay-as-you-go pricing structure, are designed to mitigate the risks associated with acquiring traditional, on-premise software and systems. Rather than make significant upfront investments in applications or technology, along with the extensive in-house staff and external consulting skills to deploy it, cloud computing permits organizations to incrementally adopt web-based solutions to meet specific business requirements.
The cloud computing model also shifts the burden of hardware or software deployment and management from the customer to the vendor. The growing acceptance of application programming interfaces (APIs) between cloud computing services also makes it easier to integrate them together.
Subscribers to Software-as-a-Service (SaaS) or Infrastructure-as-a-Service (IaaS) cloud computing solutions don’t have to worry about vendor-centric hardware or software. That’s all ‘behind the curtain’. Just beware of the de facto lock-in which may accompany some of the Platform-as-a- Service (PaaS) alternatives.
So, if you’re fed up with trying to determine which hardware platform or software stack to select for your short or long-term business needs in today’s rapidly changing competitive environment, it may be time to give cloud computing a try.
Kaplan is Managing Director of THINKstrategies (www.thinkstrategies.com), an independent consulting firm focused on the business implications of the on-demand services movement. He is also the founder of the SaaS Showplace (www.saas-showplace.com) and Managed Services Showplace (www.msp-showplace.com). He can be reached at jkaplan@thinkstrategies.com.
