Perfect storm brewing
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