Monday, September 01, 2008

PaaS Enables New ROI

If you haven't already checked out Amy Shuen's book, "Web 2.0: A Strategy Guide", you should grab a copy; it's worth the read. Amy discusses the trends around Web 2.0 in the clearest, most concise manner I could have hoped for. Enough bragging about her book - one of her diagrams inspired me to think about the effects that PaaS has on the Enterprise I.T. development model.

Amy pointed out that a version of the Long Tail lives in the I.T. application development world. Certain business problems (ie, order management) have a very real and significant value proposition; these systems are often purchased from ISV's. The next set of applications often have slightly less of an ROI and are often built by the I.T. custom development group. In many cases these are departmental applications or add-on's to the procured systems. Recently, new SaaS solutions are finding their way into the enterprise because they fulfill point-requirements and have a low-cost of entry.

In the past, this left lots of business problems in the hands of shadow I.T., or power-users. But all too often new systems concepts were taken to the I.T. review board and turned down because they didn't project an adequate ROI. The return on some of these systems may have been rewarding, but the initial investment (hardware, infrastructure licenses, long development cycles, etc.) drove down the overall ROI to the point where the idea was rejected. These systems are prime candidates for PaaS, where the initial investment is significantly decreased by the pre-hosted, pay-by-the-drink model. Once again, hosted platforms will likely be the key enabler of long tail opportunities.

The long tail model of reviewing new system requests is an interesting method for I.T. governance and planning committees to consider. It is my belief that if enterprise organizations fail to meet the needs of the long tail, they will be met by other 3rd party providers who will be all to willing to help!

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