Per­fect storm brew­ing

Finweek English Edition - - Communication & Technology - BENE­DICT KELLY benk@fin­

FIVE TECH­NOL­OGY DE­VEL­OP­MENTS typ­i­cally viewed in iso­la­tion are ac­tu­ally re­in­forc­ing each other to change the way the mar­ket op­er­ates. That’s the view of Gart­ner an­a­lyst Jeff Mann, who was a speaker at the an­nual Gart­ner Sym­po­sium in Cape Town last week. “Those five ar­eas are soft­ware as a ser­vice (SaaS), global class com­put­ing, the con­sumeri­sa­tion of IT, Web 2.0 and the Open Source soft­ware move­ment.”

A key is­sue is that many of those ser­vices rely on what Mann called global class com­put­ing, where com­pa­nies build mas­sive sys­tems to ser­vice huge global client bases. The sys­tems – such as those Google has built to sup­port its ser­vices – are larger and more re­li­able than any in­di­vid­ual com­pany would be able to build on its own.

The prob­lem that South African com­pa­nies face is that they con­tinue to in­sist on own­ing the in­fra­struc­ture their com­puter sys­tems run on. The con­cept of SaaS is in­stead of go­ing out and buy­ing soft­ware, you sim­ply sub­scribe to a ser­vice. Such ser­vices typ­i­cally of­fer less func­tion­al­ity and are more rigid in the way they of­fer cus­tomi­sa­tion. How­ever, they can be set up and used al­most in­stantly. A good ex­am­ple is Google Docs, where in­stead of us­ing Microsoft Of­fice you’re able to log on to the Google site and write a doc­u­ment or cre­ate a spread­sheet in­side your In­ter­net browser.

Mann says tightly linked to the de­liv­ery of soft­ware as a ser­vice is what’s known as the con­sumeri­sa­tion of IT. Sim­ply put, it’s the move­ment of tech­nolo­gies that start their lives as con­sumer-fo­cused of­fer­ings but brought into the busi­ness arena by em­ploy- ees. Ex­am­ples in­clude in­stant mes­sag­ing and the use of web-based mail ser­vices in­side com­pa­nies. “Peo­ple are frus­trated with the re­stric­tions placed on them by cor­po­rate IT de­part­ments, such as small mail­box sizes, when they’re able to get vir­tu­ally un­lim­ited mail­boxes from the likes of Google.”

Mann adds com­pa­nies such as Google are pos­ing a mas­sive threat to tra­di­tional soft­ware ven­dors, in­clud­ing Microsoft, as they’re able to of­fer those ser­vices un­der a com­pletely dif­fer­ent busi­ness model to that

of tra­di­tional soft­ware ven­dors. “Those ser­vices are ei­ther of­fered vir­tu­ally for free, or in­di­vid­u­als are pay­ing for ac­cess with their credit cards and get­ting im­me­di­ate ac­cess. That com­pletely by­passes the cor­po­rate buy­ing sys­tem, which favours tra­di­tional IT com­pa­nies.”

Many of the ser­vices peo­ple are us­ing what are known as Web 2.0 tech­nolo­gies – those that al­low peo­ple to store in­for­ma­tion on the In­ter­net and ac­cess it in creative ways. “The prob­lem for IT de­part­ments is that Web 2.0 can get messy and it can’t be un­der­stood in the way IT de­part­ments have worked,” says Mann.

The fi­nal part of the equa­tion is the use of open source soft­ware that pro­vides the un­der­pin­ning tech­nol­ogy for many sys­tems, al­low­ing much of the ba­sic tech­nol­ogy to be shared. That en­ables com­pa­nies build­ing the tech­nol­ogy to fo­cus on what makes their sys­tems unique.

All of those tech­nolo­gies have ex­isted in their own right for some time but Mann says what’s cur­rently hap­pen­ing is they’re com­bin­ing and re­in­forc­ing them. That cre­ates a sit­u­a­tion where the mar­ket could shift dra­mat­i­cally from tra­di­tional soft­ware mod­els to ser­vices built on the In­ter­net.

SA faces a num­ber of chal­lenges be­fore it can adopt this new model of com­put­ing. The first is band­width con­straints that still ham- per broad­band adop­tion. That’s es­pe­cially per­ti­nent when the applications com­pa­nies want to use aren’t hosted in SA. How­ever, the roll­out of new net­works in SA, plus the new in­ter­na­tional telecom­mu­ni­ca­tions ca­bles that should start com­ing on­line in 2009, will to a large ex­tent ad­dress that is­sue.

An­other is­sue that may ham­per adop­tion is con­cerns about where com­pany in­for­ma­tion re­sides. If the ap­pli­ca­tion is be­ing hosted in­ter­na­tion­ally it will re­move com­pany in­for­ma­tion from the um­brella of SA law and that of­ten raises is­sues con­cern­ing cor­po­rate gov­er­nance. How­ever, with in­creas­ingly more com­pa­nies do­ing busi­ness in­ter­na­tion­ally, they have to com­ply with reg­u­la­tory stan­dards across mul­ti­ple ge­ogra­phies and so the phys­i­cal lo­ca­tion of data should be­come less of an is­sue.

For those head­ing com­pa­nies, the im­per­a­tive is to ex­plore such trends and see how they would af­fect the way they con­duct busi­ness and, more im­por­tantly, how they can be used to make the com­pany more ef­fec­tive. That’s al­ready hap­pen­ing world­wide.

The tra­di­tional lag of 18 to 24 months in adopt­ing tech­nol­ogy in SA will pro­vide some breath­ing space. But Mann did warn that lag is get­ting smaller and cau­tioned that com­pa­nies will have to move faster in fu­ture.

Mar­ket could shift dra­mat­i­cally. Jeff Mann

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