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Future of ASP, Enterprise software challenges, Legacy or new systems, Future of the internet

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I was interviewed on these topics recently so I thought I would share some of the discussion with you.

Future of the ASP (Application Service Provider) Model
I'm don't want to explode everyone's bubble here but let's be realistic. There will be a lot of buzz around it in 2006 however practically, it will be three years before it makes a significant impact in its pervasive availability for enterprises. This moves the roadmap for wider scale adoption in the post three year time frame.

Let us step back a moment since I see the drivers in the personal use [and consumer] space also behind the future innovations in the enterprise space. Case in point, e-mail was hot with users first then it hit the enterprise. Search engines and the services offered to users at sites like MSN.com and Yahoo.com are driving software as a service more so than Salesforce.com. Adoption in enterprises is much slower but it will happen. I would recommend following the market in social media [Wikis, RSS, blogs, vlogs, live windows/office] - this is a forerunner to what you will see in the enterprise environment in 3-5 years.

Biggest software challenges for enterprises
Keeping costs controlled, ensuring IT governance and compliance [following Cobit 4.0, ITIL, Base II], integrating with corporate governance, protecting corporate brand, locking down digital identity; all within an extended secure ecosystem [intranet, supply/demand chain] of employees, partners, clients, and customers; these are the issues with large enterprise systems. And at the same time moving more towards componentized web services where costs are distributed over time, budget managed, and you pay as services are delivered. That's a lot to handle. Essentially bloat [one size fits all and
one large system] will continue to evolve to personalized, smaller fragment services where you design to fit. And how much do you outsource and in-source? Roger Sessions speaks to some of these trends in the in-depth interview with him here:
http://blogs.technet.com/cdnitmanagers/archive/2006/01/10/417165.aspx

Should we move to use new systems or work on expanding existing systems
Business is about agility and flexibility for maintaining competitive advantage. IT governance is linking to corporate governance. Warren McFarlan, professor emeritus at Harvard Business School speaks to this issue in a recent article in Harvard Business Review. This runs counter to continuing investment in existing systems and particularly legacy systems. Not so much in 2006 but over a three-to-five year period expect this to shift to smaller services where costs are budgeted and distributed using pay-as-you go web services.

What about the future of the Internet
The internet is just going to get more pervasive and bigger. Not a hard call right? I actually wrote on this topic that even made it in Mitchell Levy's widely followed book series on predictions and also in China Information World (CIW) and CCIDNET, the two No.1 business technology media channels in China. [One print and the other online.]

Look, there are 1 to 1.3 billion internet users and this will grow. Millions of MIT's Negraponte $100 computer will be distributed widely starting in 2006. Rupert Murdock says to Washington Editor's move online or be crushed. In China, there are nearly 400 million cell phone users (more than the next three nations combined) and this is a big platform for the Internet-actually, bigger than the PC. Pew Research is indicating Social computing is exploding with blogs, RSS, Wikis moving into reality and even with corporations. The $600 billion advertising market is shifting from it current 10-20% online
average and moving in 2006 in a big way to online. This is what is driving the huge gains and profits by the major online search engines and portals. So what does this mean to business. You better embrace it further and integrate into it collaborating with all. If you don't you won't survive in the medium term.

It's a market of disruptive innovation and rapid change. And you better keep up or you will lose. Have a look at what's happening in China. Look at their investments in graduate education and their production of Ph.Ds; especially in technology. It's big! In my last interview with the celebrated computer scientist and professor of engineering at Princeton, She says it's better to collaborate than compete with this engine:
http://blogs.technet.com/cdnitmanagers/archive/2005/12/02/415464.aspx

Keep a close watch on Microsoft as they ramp up further online. They see what is happening and they are making major investments, innovations! And they are well positioned to grow/expand further in this new era. In the podcast interview with Microsoft's Ilya Bukshteyn, he shares his views about this and their upcoming MIXO6 (http://www.mix06.com/) discussion:
http://blogs.technet.com/cdnitmanagers/archive/2006/01/12/417403.aspx

Thank you,
Stephen Ibaraki

Comments
  • Lots of projects helping to address software challenges - but killing the vendors in the process.  e.g. Eclipse - the formal announcement from Borland that it's getting out of tools finally came out yesterday.  Eclipse its demise, not its saviour.

    All tier-2 and smaller vendors need to be figuring out what software functions/layers are going to commoditize and whether or not they can compete in that sort of environment.

  • Warren,

    Those are good observations about "going to commoditize" and "whether or not they can compete".

    I feel the eventual keys for smaller vendors are:
    (1) Differentiation or a special uniqueness
    (2) A low cost operational model
    (3) A particular target niche
    (4) Agility through incremental innovation

    Thank you for your comments,
    Stephen Ibaraki

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