Handicapping an IT industry battle royale

Vendors have come up with a dozen ways to name the predicted shift in today's computing model away from packaged software or in-house development to outsourced application services that customers pay for on a subscription model.

Software as a service. E-services. The utility model of computing. ASP (application service provider). Hosted applications. Vendors have come up with a dozen ways to name the predicted shift in today's computing model away from packaged software or in-house development to outsourced application services that customers pay for on a subscription model.

After months of ceding marketing points to its rivals, notably Microsoft, Hewlett-Packard, and Oracle, industry granddaddy IBM is finally weighing in with a plan to leverage its powerful professional services organisation and partnerships in hosted services.

Consider the problem of scale. IT and telecommunications vendors need to crack this nut before they can develop viable business models. But no large business will hand over the keys to critical applications or infrastructure without the QoS (quality of service) assurances. Put a group of IT executives in a room now and frustrations with service providers will be one of their top 10 gripes.

The necessary dramatic shift in the IT infrastructure -- from the way applications are written to advances in complex system and network availability -- have ramifications for vendors' potential success in the hosted arena. Clearly telecom providers understand the usage model, but platform providers such as IBM and HP have a leg up on the systems technology.

Meanwhile, customers may wonder why this shift to services matters to them. But even the best-managed IT department with sufficient resources will need to incorporate more and more service providers. Customers need to lower their risk as they venture into new application areas, such as wireless web services or e-marketplaces. Outsourcing is one of the most viable options.

What hurdles do you see to application hosting?

Write to me at martin_lamonica@infoworld.com.

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