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Call Us On - 0870 766 9506
Copyright @ 2010 PTLGateway Limited
Some things in life we take for granted...
If we want electricity in our homes, we don't dig up the garden, build a generator and produce our own power. Instead, we go to a company
that provides electricity, buy as much or as little from that company as we need and then pay a bill on a monthly or quarterly basis. If we need
more electricity in any given period, we pay more, but if we then need less, we pay for less on a usage-based subscription model. But when it
comes to computing power, the prevailing trend has been for companies to build their own metaphorical generators in the garden.
Throughout the 1980s and 1990s, companies invested millions in building their own data centres, running their own business applications,
managing their own networks, etc. Sometimes this made sense commercially - if a particular system is so mission critical to your corporate
well-being, maybe you want to keep close tabs on it. Sometimes companies did a wholesale outsourcing of their data centres to other people.
This was especially appealing to large enterprise companies which could pay someone else to look after their computing infrastructures for
them, but was of less appeal - culturally and commercially - to small and medium enterprises (SMEs).
Several years ago, a number of companies attempted to launch a new model of solution provision, at the time, the costs and availability of
high speed data communications really wasn’t conducive to this model, but, over the past couple of years we are seeing a re-emergence of
this new model of computing that offers another way, more akin the subscription model of electricity provision and purchasing.
It goes by many names. In one form, it's called application service provision (ASP), while others talk about essentially the same thing as
hosted software. IBM calls it On Demand computing and expands the definition beyond software into other components of the corporate
computing infrastructure.
Whatever the nomenclature, the basic principle is the same. It’s not wholesale outsourcing; it’s not on-premise ownership; its taking all or
part of your computing infrastructure and paying for it as a service rather than as a product. Instead of paying a fixed fee based on licenses,
you pay for as much or as little as you need at any given time according to your business needs. In the boom times, you scale up your
demand; in the down times you scale down. Whilst “Whole On Demand Computing” is rising, the emergence of the concept has been seen
most clearly in the applications software sector and most notably within that grouping in the fields of Backoffice, Customer Relationship
Management (CRM) and Salesforce Automation (SFA) software.
If we take CRM as the example, millions of pounds, euros and dollars have been thrown at packaged CRM offerings with little discernible
impact. Indeed much of what has been spent sits unused on shelves according to figures from market analyst firm Gartner Group. It found
that in a one year period, some 42 per cent of CRM licenses were unused at an estimated waste of $1.2 billion that could have been spent
more effectively elsewhere. One of the reasons for this is the pricing model that most applications vendors have adopted over the years.
Users have grown accustomed to having to buy in bands of licensed users – e.g. up to 50, 50-100, 100-500 and so on. That means they need
to calculate not only how many users are likely to require access to a particular application, but also predict some slack so that they can add
more on easily as needed.
Most companies err on the side of caution, particularly in good economic times. So a company that needs a 251-seat licence will end up
buying a 500-seat licence because that's the user bracket they fall into. That 349 of those seats are never filled is an unfortunate fact of life
and one that is all the more irksome when the need for licences falls to 200 because of an economic downturn or the business going through
a bad patch. The biggest single selling point for hosted applications is the breaking of this practice.
With a hosted model, companies only pay for the licences that they need and not for unwanted ones just because that's the licence group into
which they fall.
But there are other reasons as well: the cost of implementation and ownership is reduced, the Hardware and Infrastructure you have to
implement to support the good times, but that is unjustified during the down times, commodity applications (like payroll for example) no longer
need to be managed in-house and all applications can be accessed using a simple internet browser.
A hosted solution is often ideal for younger companies that have none of the legacy applications that older firms have. The cost gains are the
most obvious benefits up front. You can avoid having to put up a lot of capital so that on an amortised basis, it's highly cost effective. As a
smaller firm, you don't have to put lots up front money for licensing. You don't have to hire an IT person to implement and administer the
applications, and you don't have to worry about backing up data; that all gets done for you remotely, and you can work from anywhere that
you have access to the Internet.
Article Credits:
Outsourcing Magazine & Nigel Smee @ PTLGateway
To find out more about how PTLGateway can help you with your hosting requirements, please visit: http://www.ptlgateway.net
Call Us On - 0870 766 9506
Copyright @ 2010 PTLGateway Limited
Some things in life we take for granted...
If we want electricity in our homes, we don't dig up the garden, build a generator and produce our own power. Instead, we go to a company
that provides electricity, buy as much or as little from that company as we need and then pay a bill on a monthly or quarterly basis. If we need
more electricity in any given period, we pay more, but if we then need less, we pay for less on a usage-based subscription model. But when it
comes to computing power, the prevailing trend has been for companies to build their own metaphorical generators in the garden.
Throughout the 1980s and 1990s, companies invested millions in building their own data centres, running their own business applications,
managing their own networks, etc. Sometimes this made sense commercially - if a particular system is so mission critical to your corporate
well-being, maybe you want to keep close tabs on it. Sometimes companies did a wholesale outsourcing of their data centres to other people.
This was especially appealing to large enterprise companies which could pay someone else to look after their computing infrastructures for
them, but was of less appeal - culturally and commercially - to small and medium enterprises (SMEs).
Several years ago, a number of companies attempted to launch a new model of solution provision, at the time, the costs and availability of
high speed data communications really wasn’t conducive to this model, but, over the past couple of years we are seeing a re-emergence of
this new model of computing that offers another way, more akin the subscription model of electricity provision and purchasing.
It goes by many names. In one form, it's called application service provision (ASP), while others talk about essentially the same thing as
hosted software. IBM calls it On Demand computing and expands the definition beyond software into other components of the corporate
computing infrastructure.
Whatever the nomenclature, the basic principle is the same. It’s not wholesale outsourcing; it’s not on-premise ownership; its taking all or
part of your computing infrastructure and paying for it as a service rather than as a product. Instead of paying a fixed fee based on licenses,
you pay for as much or as little as you need at any given time according to your business needs. In the boom times, you scale up your
demand; in the down times you scale down. Whilst “Whole On Demand Computing” is rising, the emergence of the concept has been seen
most clearly in the applications software sector and most notably within that grouping in the fields of Backoffice, Customer Relationship
Management (CRM) and Salesforce Automation (SFA) software.
If we take CRM as the example, millions of pounds, euros and dollars have been thrown at packaged CRM offerings with little discernible
impact. Indeed much of what has been spent sits unused on shelves according to figures from market analyst firm Gartner Group. It found
that in a one year period, some 42 per cent of CRM licenses were unused at an estimated waste of $1.2 billion that could have been spent
more effectively elsewhere. One of the reasons for this is the pricing model that most applications vendors have adopted over the years.
Users have grown accustomed to having to buy in bands of licensed users – e.g. up to 50, 50-100, 100-500 and so on. That means they need
to calculate not only how many users are likely to require access to a particular application, but also predict some slack so that they can add
more on easily as needed.
Most companies err on the side of caution, particularly in good economic times. So a company that needs a 251-seat licence will end up
buying a 500-seat licence because that's the user bracket they fall into. That 349 of those seats are never filled is an unfortunate fact of life
and one that is all the more irksome when the need for licences falls to 200 because of an economic downturn or the business going through
a bad patch. The biggest single selling point for hosted applications is the breaking of this practice.
With a hosted model, companies only pay for the licences that they need and not for unwanted ones just because that's the licence group into
which they fall.
But there are other reasons as well: the cost of implementation and ownership is reduced, the Hardware and Infrastructure you have to
implement to support the good times, but that is unjustified during the down times, commodity applications (like payroll for example) no longer
need to be managed in-house and all applications can be accessed using a simple internet browser.
A hosted solution is often ideal for younger companies that have none of the legacy applications that older firms have. The cost gains are the
most obvious benefits up front. You can avoid having to put up a lot of capital so that on an amortised basis, it's highly cost effective. As a
smaller firm, you don't have to put lots up front money for licensing. You don't have to hire an IT person to implement and administer the
applications, and you don't have to worry about backing up data; that all gets done for you remotely, and you can work from anywhere that
you have access to the Internet.
Article Credits:
Outsourcing Magazine & Nigel Smee @ PTLGateway
To find out more about how PTLGateway can help you with your hosting requirements, please visit: http://www.ptlgateway.net