Software vs Service Provider – why you aren’t running your apps in the cloud (yet)

article originally published in 2007 on Joanie’s Accounting and Business Technology Blog

When a user logs in to a virtual desktop, and all their valuable and beloved applications are available to them, fully functional and integrated as they are on the PC, with all their data available to them as well, the reaction is almost always one of excitement, empowerment, and – ultimately – bewilderment. “Why”, they ask, “doesn’t everyone do this?”

Good question.

At least part of the answer is due to the way software companies license and sell their applications. Now, if you can continue to produce your product in the same way you always have, distribute it using your known distribution channels (which deliver predictable performance), and realize revenue in the manner to which you have become accustomed, why would you actively seek to create disruption in the “normal” flow of things? Especially when status quo seems to be working pretty well.

Another good question.

The adoption of virtual computing (in this case, hosted desktops and the applications associated with them) is pretty much in the hands of the application software companies. It’s certainly not the platform that we are waiting for. The base technology is already proven on the hardware side, with blade servers and other high-density configurations available. And the software has been proven in a variety of deployments, as demonstrated by Microsoft Terminal Services, Quest Software, VMWare, Citrix,and others.

So – the software companies are part of the barrier.

And so it comes down to the application software manufacturers. These guys seem to fall into two main camps when it comes to cloud-ifying (my new term) their applications: (1) redevelop the app with a web framework and deliver a browser-based solution, or (2) pick a single delivery model from the above list of platform software providers, and eliminate any true integration capability. In short – webify or segregate. Either way, it creates severe limitations in the way the software can take advantage of integrations with other applications. And, for most desktop software vendors, integration with other desktop applications is frequently one of the key benefits of the product.

The web-based applications have already come to grips with this reality. Where a download of a document to your favorite word processor was once just fine, the market now demands data re-use and expanded business process integration, forcing the web applications to open themselves to outside integration and 3rd party developments. Just look at the developer network Salesforce.com has built. If that doesn’t prove that no app is an island, I don’t know what does.

But the desktop apps who have chosen to “webify” using application publishing and delivery tools have evidently forgotten that one thing: integration is part of what makes their apps popular. No business process is an island, and the data rarely stands alone. Would ACT! be so popular if it couldn’t integrate with your Outlook email client, or with your MS Word word processor? Would MS Excel be so popular if you couldn’t push almost anything to a spreadsheet file? The answer is no. This is why the integrations were developed in the first place – greater functionality and an improved value proposition, resulting in increased use and user productivity.

Too many options?

To complicate the problem, there is not just one delivery method that works for every application, business model, or user. With the variety of technologies available, independent software companies have hard choices to make in determining how their cloud’d products might be offered, and additionally by whom they might be sold. As of today, though, many software companies have approached the problem alone, where opting to use their “hosted” editions frequently eliminates the option of integrating on the desktop with other locally-run applications.

Not only does the software maker have to find the best technology/platform fit for the delivery and for their market, but they must also then consider their distribution channel – the “food chain”of delivery of the product or solution. Often this “who” that can offer the product is just as big a problem as “how”.

The maker of a given software package is in the business of selling their software, not other peoples’ software. While integration with other products is exceptionally important to the product’s value in the market, the software maker is fundamentally concerned with only the sales of their own solution. They tend to promote sales through resellers and consultants who can not only provide the software but offer install, training, and ongoing support as well. Designating sales organizations which are “authorized” to represent a product is a typical software company approach.

Many of these authorized resellers are focused exclusively on selling the software solution, not the ongoing support of the platform. These resellers are often highly skilled at working the specific software application, but may lack in-depth understanding of the platform upon which it runs.

Some authorized resellers are actually integrators – companies who sell products from a variety of sources and combine them into “solutions”. Historically, integrators have been key players in creating successful markets for certain products, providing the support and other services necessary to keep the products entrenched in the user community.

In many cases, the integrator makes their money on the support element on the arrangement, not necessarily on the product. In these situations, the platform and ongoing maintenance and support are the key revenue drivers, and the integrator may be loathe to recommend a solution to the client that cuts into their involvement and revenue stream. And hosted, managed, cloud-based application services can certainly do that.

What is the answer? Well, there isn’t just one that jumps out.

One element in the solution is recognition by software companies that their products need to be available in a hosted model. Consumers require choice in terms of their involvement with the business IT infrastructure. Some folks want to control it, others simply need access. The business of hosting applications is growing, but many of the software makers in the market aren’t behind the movement.. they are unwilling participants who leave it up to the service providers (the integrators in the datacenter) to make things work. In some cases (I will refrain from naming names herein) end-user licenses are even written to make hosting the software an illegal event.

Another element, equally if not more important, is the service provider community. With the wide variety of technical standards out there – the different technologies, different approaches, different levels of consideration, and different market sensitivities – it is no wonder that fear and doubt are prevalent in the market.

And then there is the distribution channel and method of selling licensing. Many software companies work exclusively through their authorized reseller channels. While this may benefit the user from a product knowledge standpoint, it creates difficulties with the new delivery model and frequently puts the software sales channel in direct competition with the platform providers.

The tweener gets you from here to there.

While the concept of cloud-ifying desktop and network applications may seem to be “fraught with peril”, it can be done well and deliver significant benefits to the company. By simply changing the way employees access and interact with their applications rather than changing the apps themselves, businesses can introduce an entirely new range of business benefit and capability. Outsourcing the business IT can also represent cost savings and, more importantly, allow you to focus personnel and financial resources on your core business. And, for those who see online application services as the future, this “tweener” step gets you divested from localized technology and helps to embrace the flexibility and freedom that virtual and mobile computing can deliver without forcing radical change.

Now, if we can only get the software makers on board.

Learn more about hosted applications and why Outsourced IT services, Cloud computing, and working at any time and from anywhere makes a lot of business sense.

Extending access to QuickBooks data without using QuickBooks

How many times have you wondered about giving team members and other users in your business access to QuickBooks, so they can get customer contact information for sales or support purposes, or to handle various business functions which aren’t really accounting functions?  The problem with using your accounting software to handle business operations is that you may have a hard time limiting users only to the data they need to do their jobs.  Sales people don’t need to see the financial statements, they need access to customer and product information.  Support personnel shouldn’t have access to payroll, but they need to know who the customers are and what they have so support can be provided.

In so many cases, businesses find that they need specific functionality to support the business, and naturally tend to look first at the accounting system to see if the functionality is there.  However, providing  direct access to the financial systems isn’t generally the best approach to enabling the rest of the workforce.   Rather than looking at expanding the accounting solution to service business operations, perhaps an “extension” to the accounting solution is in order.  A great example of such an extension is Method Integration.

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Your Private Cloud: Avoid the Hype and Focus on Reality

Your Private Cloud

• All the apps you want so you can do everything from anywhere
• As much data as you can accumulate
• Perfection by subscription
• It never breaks and you can’t outgrow it
• Get it all for just $1

Yeah, right.

Hype?  You bet it can be.  According to Gartner research, private cloud computing has moved into the “Peak of Inflated Expectations”.  This comes from the Gartner 2011 Hype Cycle Special Report, which offers assessments of the “maturity, business benefit and future direction of over 1,900 technologies”.  The entries are grouped into 76 different “Hype Cycles”, revealing the similar patterns of “over-enthusiasm, disillusionment, and eventual realism” that comes with every new technology or innovation.

The purpose of the report is to provide guidance to business IT decision makers, providing information on when businesses should consider adoption of a technology or IT model in order to achieve the maximum potential value.

Part of the problem is the confusion in the market, where there are multitudes of definitions being offered for cloud computing models.  Different service providers offer their solutions with varying levels of service and capability, so there is really no way to compare one Private Cloud service to another.

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CFO versus CIO: IT Procurement in the Cloud

CFO versus CIO: IT Procurement in the CloudFor as long as there has been technology, there has been a struggle for power between the enterprise CFO and CIO.  The reasons aren’t at the level of rocket science… they’re actually pretty straightforward.  The CFO simply wants to know what the expected return on the investment will be.  The CIO knows there is not always a straight line to be drawn between an IT expenditure and a near-term positive business outcome.  Sometimes it takes a while to reap the benefits of an IT project… and sometimes it’s necessary to spend the money just to maintain status quo.

There is evidence, however, that things may be changing a bit – evidence that the CFO’s influence in the enterprise may be extending more into the areas where the CIO traditionally ruled, and it’s due – at least in part – to SaaS and the Cloud.

A survey performed by Gartner and Financial Executives International revealed a number of interesting results which indicate that the balance of IT procurement power may be shifting within the enterprise.  344 senior financial executives were surveyed, and they revealed that:

• in 45% of organizations, the CFO makes or leads IT investment strategy
• about 75% of surveyed CFOs said they have little confidence in their own IT departments

A CFO.com article on the subject also mentions a KPMG study from April, in which it was reported that “73% of CFOs identified IT as the greatest risk to finance meeting its objectives”.

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An Update for Your Software is Available: Do You Really Want It Yet?

Most businesses who rely on commercial software to manage their business information recognize that keeping their software up to date is generally a good thing.  Bug fixes and feature enhancements are often delivered to licensed users in the form of interim or point releases, allowing users to benefit from recent developments immediately rather than waiting for an entirely new version to be released.  More frequently, software developers are using the Internet to provide real-time notifications to customers that program updates are available, and many software products even encourage the user to download and install the updates as soon as they become available.

In previous years, when the Internet wasn’t quite so available and useful, software companies distributed their products on CDs and disks.  Technical people would usually manage the software installations, because the process wasn’t necessarily simple or straight forward, and end-users were not really involved.  This usually gave the business at least some foundation to recover from a bad software update – by performing the initial installation on test systems, creating system backups prior to update installation, and other methods.  Today, the end-user is often among the first to know about an available software update, and may even be the one who obtains and triggers the update installation (often without IT involvement).

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