There are many perennial questions in the software world, and questioning how far a user organization can go with software-as-a-service, on-demand, and outsourcing surely ranks in the top 10. This question resurfaced recently when SAP entered the fray with an on-demand version of its CRM product. Considering the vast amount of functionality lurking in SAP's -- or Oracle's -- software portfolio, every customer, partner, and competitor wants to know how far these companies will go in mining the on-demand opportunity.
Of course, any software vendor can put forth an on-demand offering. Indeed, scuttlebutt from Silicon Valley is that venture capitalists are only funding companies that include an on-demand offering in their software portfolio.
Part of the reason that the limits of on-demand are such a persistent question is that the requirements to manage costs and focus on core competencies are themselves perennial objectives for every business manager and CIO. Meanwhile, business managers and CIOs also worry about their own turf and budget and political clout -- and therefore question whether on-demand and its related activities might be career-stalling moves.
Let me tackle that question first: No. Many of the current on-demand offerings -- CRM, human resources management, accounts payable, among others -- do represent a shift in resources and clout to partners outside the organization. But others, such as complex document management and desktop system management, don't actually replace something so much as provide a service that does things IT or other departments could never do or currently do poorly.
Take an on-demand vendor like SuccessFactors, which specializes in "talent management." A good deal of what it offers is a talent and human resources management solution that can replace a lot of what the internal HR department already does.
But others, like Citadon's on-demand document and project management products, provide functionality that simply doesn't exist in the enterprise today. And, because big projects have many external stakeholders with lots of different applications and document standards, providing this new functionality on-demand makes perfect sense.
Some on-demand solutions look threatening to IT turf, but actually let IT do a better job. Everdream's on-demand PC management solution, which lets IT manage virus protection, software and patch distribution, compliance, and lifecycle management from a single on-demand browser interface, can actually improve IT control over PC assets.
I see on-demand both replacing and renewing IT and other internal functions. That hybrid role fits two areas where I believe on-demand will soon have a major impact -- application integration/master data management and analytics.
Clearly, integration and master data management are two of the largest items in the IT budget. When those functions move outside the organization, a big chunk of the budget will move too, as it will with analytics. But so will a major headache for CIOs.
For its part, on-demand is relatively neutral. But when coupled with something that enhances value or functionality, it's an amazing solution that should be at the top of managers' must-do lists. In the end, on-demand will make careers, not break them. It's just too hard to keep a good idea down.