The IT Spending Spiral
The UK's new Lib/Con government has unveiled plans to cut £3.2 billion over the next five years from its current levels of IT spending which total around £16 billion. Meanwhile that figure is dwarfed by the U.S. federal government which currently spends around $76 billion a year on information technology, with $20 billion of that devoted to hardware, software, and file servers (Alford and Morton, 2009).
With IT public sector spending spiraling out of control, governments on both sides of the Atlantic are finally beginning to reconcile that you cannot dig your way deeper into dept in order to climb out of the fiscal hole we find ourselves in. Governments are left with little choice - either put a brake on spending today (and then perhaps at least have a say in what you decide to cut), or face a certain downgrade in credit rating that will be a much harder blow to the economy tomorrow.
The Dept Abyss
Of course, either choice is a bitter pill to swallow - but it is necessary. I believe that those in the know, in the civil services, federal governments and finance sector, have for a long time watched the figures mounting up in near disbelief, and they fully understand that no county can ignore for long the sort of deficit growth that we are currently experiencing (In the UK it's currently at 3 billion per week while the US debt increased by a total of 1.9 trillion in a single year for 2009).
Western governments have already had a glimpse of what lurks over the Greek abyss and are now in a cold sweat. And while the UK and US are not dependent like Greece, on the Euro printing presses controlled by Brussels, in some ways that actually makes things worse.
It means that an irresponsible government can borrow and spend well beyond its means, and then fallaciously rely on their ability to print money to pay off their debt if and when the marker is eventually called in. The problem is that printing money in the numbers required (around £890 billion for the total UK dept and $13 trillion for the US) inevitably results in inflation. As in the words of Milton Friedman, "inflation is taxation without legislation". The old, the very young, the middle class and small businesses that represent the backbone of western free-market economies will suffer the most as their purchasing power and savings rapidly evaporate.
Not a Sight to Reassure Nervous Credit Agencies - UK National debt: ONS
So the UK government is right to start now, while they still can. And there's no more appropriate place than the public sector - where there is a history of over-spending and bad decision-making that has seen costs spiral.
The landscape of government IT projects is littered with high-profile failures. The recent plans to create a single UK database of prisoner records is just the latest and is now weighing in at over a whopping £500 million in costs and probably won't end there.
If the US federal government figures we mentioned at the start are anything to go by, then we can say that roughly one quarter of total government IT costs are taken up by hardware/software/file servers. If true, then we can begin to appreciate the role that cloud computing can play in alleviating at least part of our budget crisis.
Cloud Computing - The Cost Saving Potential
By its very definition, cloud computing frees organizations from the costs of acquiring and maintaining IT systems, enabling them to more efficiently ‘consume' IT resources on a ‘just in time' basis instead. The cloud frees staff from the limitations of the desktop and even has the potential to increase enterprise productivity with the use of mobile-hosted applications that let staff work effectively outside of the office.
Cloud computing then, represents the ultimate playing field leveller - small and medium sized businesses can subscribe to scalable and powerful CRM, ERP or other computing resources and begin to compete with their larger rivals. And what's good for the free market is often an indication of what's good for the public sector - whether it's defense, healthcare or education. Cloud computing has the potential to put an end to the project cost overruns and provide a proactive response to the impending IT budget cuts.
The ISV Challenge - How to Compete with the Big Boys
For independent software vendors, the cloud story is panning out a little differently. The cloud industry is being quickly dominated by the big-boy vendors such as Microsoft, IBM, Google and Amazon who are using their clout to rapidly corner the cloud provision market.
The catch for the little guys is that's it's not that easy to efficiently implement a cloud offering. To build a cloud application for business use - especially if it's designed to run on mobile devices, isn't a simple undertaking. A cloud development effort begins with a Rich Internet Application (RIA) - a technology that to some extent remains below the media radar - but nevertheless represents the power at the very heart of the cloud revolution.
RIA is the ability to host powerful desktop computing over the internet. It works by finely balancing and distributing computing capabilities between the server and the client - and it relies on a clever communication structure which allows the client to call on the server when more complex tasks are demanded.
Software vendors looking to build a cloud application ignore the complexities of RIA at their peril.
To help, here are four tips that may come in handy for ISV's looking to build and deploy a cloud offering in the near future:
- Research what it really takes to build a Cloud application - don't be fooled into thinking that it's all about a cool-looking client interface. Like an iceberg, most of the RIA development effort is below the surface - with the server and communication layers. So fancy client-side tools such as Microsoft Silverlight or Adobe Air/Flex in reality are only part of the RIA effort.
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Mobile enterprise applications require more thinking out. For a cloud application to run on a mobile device, software vendors need to consider not just the smaller screen factor but also the fact that users will typically avoid complex tasks that can be more easily handled from the office desktop. Mobile applications therefore need to be imaginatively thought out and adequately prototyped to ensure simplicity of use and the ‘completion of tasks' rather than the straightforward one-to-one replication of back-office systems.
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Use an application platform rather than coding to standardize on skill-sets. As already mentioned, cloud applications based on RIA require the use of different teams and different programming languages to build the different server and client sides of the application. Using a dedicated RIA application platform that provides a single toolset for these tasks can save software designers valuable time and money and help ISV's get their product to market before the big vendors succeed in saturating the field.
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Don't forget about integration! Even once you've built a great cloud application - your customers are going to need to integrate their cloud data with their existing on-premise applications and back-office systems. Integration inherently improves the ROI of cloud data, so it's worthwhile offering some sort of integration capability. Using a proven integration platform with ready-made connectors to common enterprise systems such as Salesforce.com and SAP is a step in the right direction and will facilitate a fast and cost-effective integration that will appeal to many customers - especially those put off by the thought of another long, manually-coded project.
Integrating business applications was always an on-premise issue. And then the Cloud came along and made the situation more complicated:
Businesses now need to consider how to adequately integrate and synchronize applications, some of which are on the company's own servers or premises (ERP systems for example), and some of which are accessed via the internet/browser(CRM systems or email systems are highly popular among enterprises).
With around 70% of firms already using SaaS/Cloud apps or considering moving to the Cloud, research by Mimecast (http://www.mimecast.com/) finds that security and integration are two of the main fears of those companies contemplating moving to the Cloud.
Despite the conceptual difficulties involved in thinking about an on-premise to on-demand integration, the reality is that it's no more complex or difficult to achieve than a common on-premise to on-premise integration scenario. Especially if you're using a tool such as iBOLT that comes with pre-written code (saving companies from having to manually write code such as C#) and specially created adaptors for common on-demand systems such as Salesforce.com as well as on-premise adaptors for systems such as SAP, IBM i, JDE, Lotus Notes, Microsoft Dynamics CRM, HL7 and more..
So at the end of the day, firms considering the acquisition of Cloud and SaaS applications can already strike integration fears off their list of concerns.
Here's a common on-premise to on-demand integration scenario explained visually - enjoy.
Manufacturingtalk has now published our article which examines how to upgrade IT application functionality for the manufacturing industry.
In particular, the article examines subsribing to a SaaS vs. custom-building the software application in-house using rich internet application platforms such as uniPaaS.
For a more in-depth look at the application technology needs of the manufacturing sector and how they can be solved have a look at the following web page and white paper.
Rich Internet applications and their brainchild, software-as-a-service (SaaS), are expensive to build. Today they represent the most challenging development process yet.
Regev Yativ, Magic Software's President & CEO for the Americas tells Enterprise Systems how to get around the complexity of building and deploying RIA and SaaS in this article just out.
Other collateral news - we have a new case study now available - this one is about FKB - a Liechtenstein-based health insurance provider that, using uniPaaS, has become the largest health insurance provider in Lichtenstein with the lowest operating costs in the industry for both Liechtenstein and Switzerland.
Website news, we've added even more new items to our solutions section - this time focusing on Magic Software's solutions for specific industry verticals - so far we have healthcare, manufacturing, finance, government and logistics - along with relevant case studies that describe some of the real-life challenges and implementations in each industry.
And lastly, the first of two Get IT Together seminars is happening in Connecticut today. Last minute places are still available for the Nov 12th event in San Diego. If you are interested in attending ring as soon as possible to reserve your place on - 949 250 1718.
Following on from my previous manufacturing posts, I've now compiled the main 5 benefits of Rich Internet Applications (RIA) for manufacturing industries into a new white paper that you can download for free here.
Rich Internet Applications are particularly beneficial to manufacturing companies. That's because the nature of manufacturing requires a combination of powerful business functionality (to handle their diverse work scope - including production, delivery, inventory, sales force etc), that they need to display in a myriad of ways (graphically and in complex table format), and they need it available anywhere (at the production line site as well as on the move in the warehouse etc).
They can get this sort of rich internet functionality today by sourcing it from a SaaS vendor of course. It's quick to assimilate, and cost-effective to run. The only problem is if the vendor doesn't have exactly the type of functionality that the manufacturer needs. There's not much room for customization with an off-the-shelf SaaS product.
There is then an advantage to building your own RIA in house - as long as it can be done without incurring high costs and an over-long development effort!
The white paper first highlights the benefits of RIA to manufacturers and then describes the most efficient and effective path to implementing RIA in-house.
All comments and feeback are welcome!
We've spoken previously about the need for Information Technology to evolve into Business Technology.
Here's how Forrester explains things:
Every aspect of the enterprise is increasingly embodied in the technology it uses, from process application-driven business operations to Internet-based interactions with customers and suppliers. Although today, only a few enterprises recognize the implications of this trend, within five years most will realize that this "business technology" (BT) is vital to delivering business results. Enterprises will embrace the competitive potential of technology and actively manage its use. BT providers will hone offerings to enhance business results, flexibility, and configurability.
I understand from this the following:
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Technology is becoming more important to all aspects of a business' operations.
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Companies will soon realize (if not already) that to remain competitive they need their information technology to deliver real business results.
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Companies that aquire IT systems that focus on 'business' delivery rather than 'technology' will end up the winners - by cutting their operational costs, improving productivity and increasing market share.
So if you're an enterprise company with an internal IT department or an ISV trying to stay afload against giant SaaS vendors here's your chance to gain a step ahead:
Magic Software is holding a special, one day seminar this November in the United States:
Get IT together will give you the knowledge and tools to more effectively utilize your IT resources and deliver quantifiable business results in a reasonable time.
The seminar is equally suited for business executives and IT professionals alike.
Get IT together is being held in only two locations -
- Uncasville, Connecticut on November 10
- San Diego, California on November 12
This seminar will feature some of industry's leading technology experts in the fields of application development, RIA, SaaS, business integration and IT business optimization.
If you're based in the US, or going to be travelling in the US in the second week of November, don't miss out on your chance to attend this FREE day.
In today's business and economic environment there is literally nothing more important that you can be doing right now than learning how to leverage your IT to perform more for your business.
For more information visit http://www.getittogether.us/ or speak directly to my US collegue Glenn Johnson. You can also give him a call to reserve your place on the number below:
To reserve your place now call: 949 250 1718
It seems that even paradise is suffering these days. Australia is suffering from a skill-set shortage that, according to this interview, is hampering the ability of businesses to deliver and innovate.
70% of the businesses asked (according to the news item) were worried about skill-set shortages hampering a business's ability to deliver. AND of those, 60% say it is negatively impacting their ability to innovate.
Business innovation (we talk more about this here) is what keeps small economies going. I would also argue that innovation is the only way to resuscitate a large economy suffering from recession and the over-leverage of service and financial sectors.
The costs of acquiring the right IT skills to ensure business innovation are constantly going up it seems, particularly when a business is looking to building a complex rich business application (RIA).
The nature of RIA and SaaS applications and their unique performance benefits means that they require multiple teams of developers to build the separate Client, Server and Communication layers of the application. Normally these would be achieved using a combination of development tools. (see Flex and C# vs. uniPaaS)
Is there a solution then? Of course. Work smarter!
uniPaaS is a culmination of 3 unique technological innovations that allow you to achieve your business objectives faster and easier - in this case to build a rich business internet application using only a single skill-set and programming language.
So no more skill shortages, and no more fears for business delivery and innovation..
Hello Australia!
I put together an article a few months back for the DM Review (with a little help from my good friend Avigdor Luttinger, our Business Development VP) that may be useful if you're a small ISV with an 80's or 90's era Magic Software application - here's the article again in full..
Staying Alive! How to Morph your 80's Era Apps into Rich Internet Applications (RIA) and Software as a Service (SaaS)
The Software-as-a-Service (SaaS) business application market is now in accelerated growth phase and is set to conquer both the SME and Enterprise space. Salesforce.com is one of the largest and most successful of these SaaS vendors to date and represents the driving force behind today's SaaS trend. So what's now preventing other Enterprise vendors from replicating the success of Salesforce.com and becoming leading SaaS providers themselves?
An important reason could be that they have not yet conquered the dual challenges of Rich Internet Applications (RIA) development and SaaS delivery that would enable them to attract small ISV's and their applications in great enough numbers to offer a full application portfolio. And for good reason:
The RIA Development Hurdle
One of the main conditions for successful Web-based SaaS delivery is RIA orientation. This means that the SaaS application must provide a user-experience at least on-par with traditional client/server applications and the delivery must be via a very thin client that doesn't require any explicit installation and management.
A number of solutions such as Adobe Flex and Microsoft Silverlight have the toolboxes and platforms for RIA that provides the degree of user experience demanded today. However, the level of performance comes at the expense of a heavy development effort - meaning that you have to create separate client and server tiers and the in-between communication layer. And to do this you need a workforce with at least 2 different skill-sets. The result is a more complex project than the prevailing approach that uses a single Java-type development paradigm.
The SaaS Delivery Hurdle
To add to the difficulty of RIA development is the problem of SaaS delivery. One of the major advantages of SaaS (unlike ASP's) is their use of a single application image that can be applied to multiple users. However, while great for usability, this creates a huge challenge when using code-based applications - where your multi-user capability must be built-in to the code. For example, how do you keep track of which user is using what, and when? How do you limit their use in a tailored subscription plan? And how do you work out how much to bill them?
Overcoming the Legacy Application Business Barrier
Salesforce.com is the only player who's effectively answered both the RIA and SaaS challenges by developing their offering from scratch. Today, Salesforce.com has a very nice application, and a series of ISV partner-created add-ons. However, what happens when a small ISV partner, wanting to add-on his application to a major vendor, finds he can't do so easily because his application was built using a traditional programming language? Even players such as Salesforce.com have found themselves with less content than they would perhaps like - because their new proprietary platform is simply unable to assimilate the type of applications built using traditional programming language.
As a result there is a business barrier to ISV's joining SaaS providers in greater numbers -And this barrier is now preventing more Enterprise vendors from replicating the success of Salesforce.com. The challenge of creating a well-rounded SaaS offering based in part upon successfully assimilating ISV's legacy applications remains the primary stumbling block for SaaS providers today.
The Solution - Metadata Driven Application Platforms
Magic Software has perfected the art of the metadata driven application platform. This enables you to migrate and carry over business logic across successive generations of operating system and hardware. So you can easily take a DOS or Novell based Magic Software application and render it into an OS400, Windows, or Web environment - without having to modify the application, and while fully conserving the business logic of the application.
As a result, Magic Software's ecosystem, consisting of perhaps tens of thousands of applications, many of which are packaged and sold by small ISV's, can now be rendered into RIA and SaaS mode without great expense, and without acquiring a workforce with multiple skill-sets.
All of this means that if the big Enterprise players want to successfully build a SaaS portfolio and attract ISV partners and their applications, then they should look no further. Metadata driven application platforms represent a phenomenal opportunity, allowing vendors to harness the potential business logic within an ISV's legacy application. Enterprise vendors can now transform 80's era applications quickly, easily and cost-effectively into the types of products demanded by today's customers and expose new markets to the benefits of the SaaS and RIA revolution.
A good article here by Cam Wayland on CRN. She asks why resellers are finding it hard to move to SaaS - and suggests that it's because of the lower revenue stream that SaaS generates when compared to Client-Server, Open Client model applications.
After doing the maths, she concludes that; "It would take six months for the reseller to make the same profit from selling a SaaS solution compared to a "traditional" software or hardware or solution."
But according to Cam, it's not all bad news. Resellers have to consider the fact that SaaS commissions are generally earned in one go, whereas traditional software commissions, while bigger, are often spread over monthly payments.
However, in her opinion "it will take 12-18 months of steady building of the annuity base before the full financial benefits are realised."
In other words, while the SaaS model is better for your long term business, it takes time before you start seeing comparable levels of revenue that you may have been used to with your traditional software sales.
The answer is simple then - Don't give up you're traditional software licence sales! Keep them going AT THE SAME TIME as offering a SaaS model. This way you keep your high revenue streams while developing your SaaS customer base.
While Cam offers 5 tips to SaaS success at the end of her article, I would therefore respectfully add a sixth: get an application platform that allows you to deploy both traditional Client/Server apps AND SaaS from the same code-base - and for the same single development effort.
We've spoken about this extensively here.
For the second consecutive month running, Magic Software is listed among the Top 25 Most Popular companies in the SaaS Directory (click this link to view full top 25 listing).
Magic Software's current position is #10.
The listing is based on the number of votes the company receives and the number of times it's profile is viewed during the month.
To read Magic Software's full profile on the directory, go here.
