Is software as a service the answer for SMEs?

The more grey-haired among us grew up in an era before the personal computer, when our first experience of computing was often a teletype linked at just a few hundred bits/sec to a timeshared mainframe, writes Jim Norton. The dream in those days was to have dedicated computing resources under your own control. Now the wheel in computing may be turning back to a similar model, but this time for all the right reasons.

The more grey-haired among us grew up in an era before the personal computer, when our first experience of computing was often a teletype linked at just a few hundred bits/sec to a timeshared mainframe, writes Jim Norton. The dream in those days was to have dedicated computing resources under your own control. Now the wheel in computing may be turning back to a similar model, but this time for all the right reasons.

The small and medium-sized organisations in which the vast majority of Institute of Directors (IoD) members work want to grow their businesses and see IT investment as key to that goal. That has been consistent over four years of market research involving 500 member samples throughout the UK.

At the same time, SMEs grow increasingly concerned about a wide range of IT issues, from data security and business continuity to keeping up with new technology and training. Many SMEs find the contribution from IT is increasingly business critical, yet it is becoming ever more difficult to support that IT professionally within their own limited resources. They like the benefits, but they would also like to have someone take the pain away.

For many years, the IoD has believed that what was first known as application service provision (ASP), and is now more frequently referred to as software as a service, was of potentially great benefit to SMEs. It could level the playing field for them against large competitors. But until fairly recently, many SMEs did not share that view. They remembered a time when you could pick up the phone and find no dial tone they were not open to being sold hosted applications or "computer tone". They wanted their IT systems where they could see (and kick) them. Early efforts with ASP some six years ago were not a roaring success. Yet, with SMEs increasingly locked into the needs of sector supply chains, co-ordinated top to bottom by networks and IT systems, cost-effective access to expensive sector applications was becoming more important.

Key advance

The key advance in the past five years has been the move to wide availability of fast, and increasingly cost-competitive, broadband access. It really is becoming possible for an SME to have its applications professionally hosted off site, accessing them through ultra-thin clients (even just "screen scrapers"). Fast broadband access means low latency and good response times can be maintained. With the right contracts and service level agreements in place, all the hassle of virus protection, firewalls, intruder detection, data backup, resilience, and so on, can be offloaded. Those for whom it is a core competence - and not a weekend chore - can look after it. SMEs can get back to worrying about their own businesses.

Recent research by the IoD suggests attitudes among SMEs are changing quickly to reflect the new possibilities.

SMEs now regard software as a service as a key tool, both for saving costs and improving efficiency. Even those tools rated higher, such as "virtual office" and "total mobility", depend on hosted applications.

Aggressive pricing

Problems solved? Well, maybe. The key determinant will be aggressive pricing. Many software as a service providers have still not got fully to grips with the structure of pricing models that will attract SMEs in their droves. In many cases, it is still just "let's try a toe in the water". Perhaps the "green computing" agenda will provide the final stimulus. Large server farms, properly dimensioned and loaded, are likely to be vastly more power-efficient than millions of individual PCs running at very low utilisation for much of the time. Large mass-storage systems, even with multiple layers of redundancy and backup, are likely to be far more efficient than millions of hard drives often spinning while scarcely used.

This debate will polarise the IT industry. We have been here before with "network computers" and "thin clients", but genuinely pervasive, fast and cost-effective communications were not then in place. We won't simply see mega grid computing datacentres. Those will certainly exist, as the ultimate data repositories, but in practice more local grid centres will be established in major towns and cities. Wherever you happen to be working, your processing will be hosted (and your key data cached) quite close by in order to ensure immediate response times. Local loop unbundling (LLU) points might just end up as datacentres too. Those IT and service companies that have been exploring grid technology are likely to be cheering at this point. Those who depend on selling millions of high-powered desktop PCs or laptops, replete with their own unique copies of software packages with much of the functionality seldom used, will perhaps be less impressed.

Do I really want to return to the age of timesharing? Well, once I have got over the visceral horror of the memory, perhaps I do. After all, if I genuinely cannot tell, in performance terms, that the processing is not taking place on my lap or at my desktop, why should I care? Better still, someone else can worry about all the security and resilience issues. The UK might then cease to head the league table for the number of "zombied" PCs taking part in global denial-of-service attacks with their owners blissfully unaware.




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