SaaS Notes

Getting back to basics

How many times in the last quarter have you heard the phrase, we need to get back to the basics? It is almost always uttered in the context of the current economic downturn and a company's need to return to its core competencies. This begs the question: Is IT one of your company's core business competencies. I would argue that IT is purely a business enabler, not a core competency for most businesses.

Nicholas Carr, Harvard Business Review's Editor-at-Large, had it right when he released his highly controversial article (and then book) proclaiming IT doesn't matter. In the article he draws parallels between technology and the railroads. Both have reshaped industries and economies. Both have opened doors of opportunity for forward-looking companies in the nascent phase of rollout. However, both are now commodities and therefore do not offer sustained competitive advantage.

Because IT is a commodity input, firms need to change their attention from IT as a competitive differentiator to one of IT as cost containment, process improvement, and access, network and data security.

Without an IT environment, firms can't compete. Without maintaining and keeping the infrastructure current, the disadvantages increase exponentially due to the advantages competing firms gain through the implementation of new technologies. Most recently social media, collaboration and unified communications are just a few examples where early adopters have clearly gained rapid advantages over the laggards.

Where am I going with this?

Look closely at the most recent technologies that offer competitive advantages. The common thread is that each one is an application or suite of applications. The business advantages of technology no longer rest with the physical infrastructure. In fact, the physical infrastructure has moved from desktops to laptops to smart phones and mobile devices.

Why do businesses need to build, manage and maintain a physical environment? The expenses associated with each and every company having its own IT environment are astronomical. Factor in security, regulatory compliance, integration efforts, cutovers and the day-to-day care of the environment and the dollars spent are staggering. Could there be a greater waste of money? I don't think so.

If the advantages of IT are in the applications, and users are accessing the applications from a plethora of devices, the logical cost containment for IT would be to shed the physical environment and move the applications into the cloud. Cloud computing and SaaS offers users the ability to work anytime, anywhere. It also removes the day-to-day costs associated with building and maintaining a physical IT environment.

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