CIOs Have Tough Decisions To Make Regarding SaaS

CIO’s Tough Decisions

cloud computing If you have followed the gradual trend to cloud computing by businesses, you might come to think that Software as a Service (SaaS) is the only way to acquire the latest and greatest software. While it is true that industry giants like Oracle and Deltek have launched new cloud software at unprecedented rates and while true that many new software enterprises are creating products exclusively for SaaS, these products represent only a small fraction of the overall software marketplace.

The bulk of software development is designed for on-premise use through a perpetual license model. However more and more companies are realising the many benefits of Infrastructure as a Service (IaaS) and Software as a Service and are gradually shifting to cloud computing. This transition offers many financial and service advantages to SMEs and to large corporations.

However, many of the largest companies are challenged to shift due to heavy investments to their “loyalty” or “customized” software. These companies face the decision to use the cloud and their proprietary software or to attempt to transition the enterprise’s loyalty software to the cloud. Many publicly held corporations face this delicate choice.

However, for the most part, loyalty software programs can be new and improved for the cloud or imported for cloud use. It could take years to recoup the expenditures but as a model, the investment will be an excellent ROI.

Making the Transition

Businesses have two basic choices to make the transition to the cloud:

  1. Businesses can opt to shift everything to the new cloud model at one time.
  1. Business can create a hybrid model where products are cloud enabled and offered in both modes for a certain amount of break-in time.

As a matter of practicality, option number two is the gentler transition model that most large businesses choose to follow. SMEs may prefer to start saving money and expand their services at the same time. For these companies, option one is popular.

CIO Thinking

Chief Information Officers (CIOs) are offered hundreds of thousands of apps in the cloud. They usually want to capitalise on the economies of scale offered by the cloud, especially in terms of SaaS. These CIOs are well aware that customers using SaaS must make huge inroads in a very quick time. Most new enterprises are in the cloud and are promoting the services to the disadvantage of companies restricted with outdated software and infrastructure.

For this reason, more CIOs are developing a different view about the most effective way to come to the cloud. The evolving concept embraces leveraging the selected technology advances of IaaS and converting legacy models to the cloud over time.

This has proven a successful strategy for publicly held companies in the banking, financial services and insurance industries and in other sectors. This gives credence to the findings of Information Week’s 2013 State of Cloud Computing Survey, which engaged 446 business technology professionals.

The results indicated: “It turns out that many independent software vendors aren’t equipped to meet the demands of today’s enterprises. Their infrastructure costs tend to be high and their response times poor because they’re not running IaaS — they’re running multitenant, big-box, hosted infrastructure in one or two data centers. Because it’s ‘as a service,’ they call it cloud, but it’s really not. It’s hosting. If the price point and features work for you, great. But our experience is that ISVs turned hosting providers tend to charge more and deliver less.”

Josh Crowe, a senior VP at Internap clarifies the findings; “True IaaS providers deliver savings, agility and scaling benefits. So why do IT shops run so many applications on their own servers? Part of the reason you don’t see apps aggressively moving to the cloud is because of the refresh cycle.”

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