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I completely disagree with Greg Papadapoulos' points (here and here) about software as a service/ multi-tenant software/ ASP model reborn. Greg of course is the CTO of Sun Microsystems and he has an axe to grind, and, in the spirit of full disclosure, so do I, working for one of Sun's biggest competitors.
I flatly don't believe the oft-cited analogy that "software=electricity" holds for business software. True, it works well in certain circumstances e.g. consumer computing -- this blog, for example, is hosted by edithere.com and Thomas the Webmaster does an absolutely fabulous job. (It's like, never down! Really!).
Greg's right about one thing: the nature of software use is evolving. It's like this: in the nineties companies bought software to do -- stuff. Then the bubble burst, and people wanted software to do the same stuff but much more inexpensively. This is what Greg thinks is driving the market, and thus his argument about outsourcing software functions.
But I assert that his model is already obsolete.
Now a Great Convergence is occurring, similar to that which precipitated the explosive growth of desktop suites in the mid-80's, and the Internet in the mid-90's. Companies see software as the engine behind growth, behind agility, behind compliance, behind globalization. As seductive as the technology behind SOA and ESB and Web Services (blah, blah) is, business, under exponentially increasing competitive and regulatory pressures, sees computing as the answer, and computing must rise to that challenge. The successful CIO is the one who is a powerful advocate of business goals.
While the ASP model will survive, its utility must be questioned: if you accept that compliance, rapidly growing competition (some of which is on a global scale), and agility are key new drivers, then how your software addresses those needs represents the essence of your competitive differentiation. Ideally, YOU control moment by moment how your information infrastructure responds to rapidly changing market conditions.
Computing is not a utility: it's your crown jewels.
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