Demand for software hosting and management services is
increasing as businessesfeel the effects of the credit crunch, says
enterprise resource planning (ERP) supplier
Lawson Software.
Harry Debes, president and chief executive of Lawson, said there
is a trend towards
hosted services as businesses seek to cut IT infrastructure
maintenance costs and streamline IT departments.
"Hosting means companies can tap into infrastructure maintenance
skills as and when they need them without having to employ
full-time specialists," he said.
An increasing number of Lawson customers are switching to hosted
services, said Debes. But he emphasised there was little interest
in the
software-as-a-service (Saas) model.
Lawson has tested the Saas market with its
Human Capital Management software, but found little uptake
compared with the traditional perpetual licensing model.
"Customers like Walmart, Mastercard and McDonalds prefer on-site
hosting because they all want to keep commercially sensitive
information behind their firewalls," said Debes.
Where security is not a concern, Saas is best suited to meeting
short-term strategic business needs that do not involve complicated
business processes, said Debes.
But there are no integrated enterprise-wide or customisable Saas
offerings and businesses are finding that it is more expensive in
the long-term, he said.
"Unlike other models, Saas costs are on-going and there are
often hidden costs for integration with other Saas applications
implemented
without consultation by other departments in an
enterprise."
The need to cut integration and customisation costs is driving
business adoption of industry-specific software, according to
Debes.
"CIOs are looking for standard products to meet specific
business needs. There is too much risk associated with generic
software because customisation increases costs and delays returns,"
he said.
Lawson's growth projections are "more conservative" than five
months ago, but Debes said no dramatic cuts in software spending
are expected.
"Although there is greater scrutiny of expenditure, companies
are likely to continue to invest in software tools to increase the
efficiency of the business," he said.
Debes also predicts the economic downturn will present
opportunities for all the larger suppliers as CIOs looks for stable
software partners to support the business through difficult
times.