Some thoughts about SaaS and cloud computing

Take a look at your data center and ask: Why is this here?

In my last post, I mentioned that Software as a Service (SaaS) is the direction applications are going. I want to elaborate a bit.

There has been a lot of discussion (and marketing push and pull) around SaaS and cloud computing over the last couple of years, and rightfully so. The world of information technology is incredibly volatile, with applications and practices changing all the time, very fast. It has really been in the last couple of years that mobile computing became main stream, and it has been only a few years since "dial-up" was the normal way to access the Internet, such as it was. If you watch a movie like "Home Alone" or "Adventures in Babysitting" you wonder why they don't just pop open their mobile phones and call their moms. You can still play a CD released in 1985, but you sure can't use a computer from 1995, let alone 1985. Change is such a given that when the crazy innovation era we are in now starts to slow down, which it must, we'll all start pulling our collective hair out wondering why we can still happily use a five-year-old laptop computer like we can still drive a five-year-old car.

So, being that we are still in the hyper-growth period of computing, it is no wonder that our use of business applications are changing, and that something that made sense ten years ago, or even two years ago, might not make as much sense today.

Think about your business for a second. What is it you do for a living? Do you sell cars or real estate? Are you a lawyer? Are you in Food Services? Oil and Gas? Now, think about what you use to help you with your business or your job. You have the usual office furniture, things like chairs, desks, cubes, etc. You have phones and, now that we are in the post "Home Alone" era, mobile phones. You have a car. Your business could have trucks. You have a place to store inventory and/or supplies. You have paper and fax machines. You have tools and equipment, perhaps.

With all these tools, supplies, equipment, and "plant," you perform the functions of your company, which is at core getting and keeping paying customers and delivering to them products and/or services for an adequate return.

How much of your own electrical work do you do? When you need plumbing done, what do you do? If you need a new car or truck, do you make one? If you need a new office, do you build one? If you own or work for a small- to medium-sized company, do you have a lawyer or CPA on the payroll? Even if you do, do they do all of your legal or accounting/tax work?

Why then would you ever have your own data center? Why would you ever have on hand database specialists? Network specialists? Security specialists? Programmers? Why would you ever have a mail server anywhere near your coffee maker? Why would you ever have a SAN?

Let me posit an answer: because you have to. Now. The state of IT and business applications is that, at least until very recently, you have to have servers and network equipment and data storage and big air conditioners and fire suppression and the people to run all this, because, until recently, there was no realistic way to have it somewhere else.

Remember, only a few years ago, major companies like KPMG or Countrywide or ARCO, to name only three, used modems to connect to their satellite offices, and considered 64Kbit connections to be high-speed and very adequate (and expensive) links between offices. If you had a 64Kbit link at your house now, you'd be crying the blues. You have more bandwidth on your smart phone - lots more - than was commonly used in the mid-90's for enterprise use by corporate America to support hundreds of users.

Meanwhile, to put this in context, companies have been hiring legal and accounting firms, using outside electricians and plumbers, and even using contract manufacturers, for decades.

Now, we have an option: we no longer need to have a "traditional" data center. Companies, and not just small companies, can now forgo the data center and just supply laptops, desktop computers, mobile devices, and printers, with a minimal amount of networking. You can even get rid of most of the wires and deploy a wireless network. Then, use SaaS applications for everything else. This is doable today, but it was not a realistic option until very recently. Neither was downloading and playing music on your phone an option until very recently, and yet here we are.

Right now we are in transition, very much so. Software providers are figuring out pricing and support methods. One of the controversies last week was that SaaS customer service software provider Zendesk changed their pricing model (up), opening up questions surrounding vendor lock-in, data ownership, fair pricing, competition, etc. There are security concerns as well. But also, SAP announced that they are almost ready for prime time in SaaS. has been working and modifying the model for years, trying to figure out pricing for every day users vs. once-a-month users, etc.

As the cost model is being figured out, it will be more and more cost-effective to use SaaS and Cloud services. Already, Google Applications is so much cheaper than the Microsoft Office/Exchange/Intel Server behemoth that it is only a matter of time before all companies outsource their email and messaging. If you must have Exchange, even hosted Exchange systems are cheaper than having it on site.

Cost, security, vendor "lock-in," etc., are all details. Necessary to consider and address, but details, and what you'd expect during a period of transition.

But, if you can, take a peak into your data center. Take a look at all the wires, all the humming servers, the battery back-up systems, the routers and switches, the spinning power meter. Enjoy the "whoosh" of expensive, cool refrigerated air that whirls by you when you open the door. See the flashing lights. And then ask yourself: Why is this here?

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