SaaS and the Composable Business

Doug Clark, IBM’s Head of Cloud in the UK, recently used an interesting turn of phrase that sums up the way cloud is changing not just the relationship between business and technology but also the way businesses structure themselves in order to exploit what cloud services offer them.

From the company’s point of view, what IBM is aiming to sell is what it calls the Dynamic Hybrid Cloud – essentially cloud services, built on open standards, that are capable of being rapidly configured and re-configured to meet the changing needs of any business.

That does, however, mean that businesses have to recognise that they now need to change rapidly and often as their markets change and develop. This, as Clark observed, means that they now need to be Composable Businesses. Indeed, the really now need to be dynamically re-composable businesses, able to change – from minor shift in direction or emphasis through to major re-direction – fast enough to catch those changes in their markets.

He indicated that a growing number of businesses are catching on to this requirement by casting interested eyes towards SaaS as a source of future information management resources. A recent survey conducted by the company has shown that a growing number of businesses now see SaaS as providing real advantages, with 47 percent seeing SaaS as offering a real competitive advantage and 41 percent seeing it reducing their total cost of ownership when it comes to providing IT resources.

The survey also shows that the early adopters that have taken up SaaS are generating twice the revenue of the rest of their contemporary businesses, Clark suggested.

“IBM now has around 110 SaaS applications available, across HR, marketing and sales/ecommerce,” he said, “and the key advantage for businesses is that they can use them as and when they need them, rather than having to invest in the infrastructure and applications.

“For example IBM will, for the 25^th year, be providing the information services for Wimbledon. In the past this has involved the company setting up a datacentre at the Club in very cramped facilities, which become more cramped as the information services needed have grown. This year, however, the information services will all be provided in the cloud, as SaaS, from our datacentre in North Carolina. And in addition to the match scores we will also be collecting a large amount of social data. That will all be analysed using IBM’s new Watson services.”

This is a good, practical example of how cloud services, and SaaS in particular, can help a business become re-composable. The cost of the resources required to provide these capabilities – especially if provision on-premise - would be prohibitive and it would be all but impossible for a business to accurately predict the upper limit of scale required to accommodate tasks such as analysing social media inputs. So the chances of service overload – and consequential reputation damage - would be high.

The other side of that coin is that, by using SaaS, it becomes possible for the Wimbledon organisers and their partners (such as the BBC providing global TV coverage) to not only contemplate analysis of social media input so that any opportunities to improve the experience for its customers can be identified, but also set it up with relative ease.

Not only that, but by using Watson as a SaaS service, it gets the use of one of the latest, and arguably most powerful Big Data analysis tools currently available. Trying to do that with an on-premise infrastructure would probably bankrupt the organisation in acquisition costs alone.

This is not exactly reduction of total cost of ownership, more making the economically impossible possible, but that question of cost is still a crucial. Clark observed that it still holds that some 70 percent of the typical IT budget goes towards just `keeping the lights on’ - keeping the systems running.

What is perhaps most notable about this figure is that, despite many developments in technology and reductions in unit costs, energy consumption and staffing requirements, that figure has remained remarkably constant for the last 25-30 years at least. This does beg the question as to whether it is actually a mathematical constant in the disbursement of IT budgets, but it also shows that maybe it is time for both business users and IT vendors to appreciate that cost on its own is now a fallacious argument.

The real argument now is what can be achieved by businesses exploiting SaaS, fast software development tools, APIs and integration/collaboration tools to give them the business agility to compose – and re-compose themselves – fast enough to stay in lock-step with the inevitable changes that will come in their marketplaces.