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Commentary & Analysis

A Different Kind of On Demand

By Chuck Gehman IBM'

By WhatTheyThink Staff
Published: November 29, 2004

By Chuck Gehman IBM's mantra for On Demand is, "You shouldn't be buying your IT in boxes. You should be buying it with a thermostat." November 29, 2004 -- A few years back, a handful of companies in the graphic arts industry began to employ the ASP (Application Service Provider) model for software delivery. The text-book definition of ASP is a third-party entity that manages and distributes software-based services and solutions to customers across a wide area network (or the Internet) from a central data center. While that definition still applies, more and more ASPs are both the developers of the software as well as the hosting service provider and manager. After all, who better to manage the applications and the servers they run on than the company who developed them? Thus the definition is shifting from "ASP" to "Hosted", or "On Demand" software that you purchase and use as you need it and pay as you go without having to do any heavy lifting to deploy and support it. Many large software and computer companies are promoting the idea of On-Demand computing power. One major proponent is IBM. According to IBM, a company's computing needs can't be reduced to a fixed set of capabilities. Like everything else in the world, they fluctuate, both predictably and unpredictably. Rises in demand, drops in demand, new opportunities and unforeseen obstacles can all make your computing needs rise or fall in a short time--usually too short to acquire and deploy new hardware or applications. IBM's mantra for On Demand is, "You shouldn't be buying your IT in boxes. You should be buying it with a thermostat." On Demand business models can give your company flexibility to adjust your IT capabilities (using the IBM metaphor, to "dial up" and "dial down" your IT capabilities) as you need it, when you need it, without disruption to your operations. Small and large companies alike can benefit from this new way of acquiring and using software through increased security, ensured uptime, and expert support. This way of delivering software is becoming increasingly popular. In addition to the wide range of capabilities offered by IBM is the example of CRM vendor Salesforce.com, Inc., which had a successful IPO on the NYSE (symbol: CRM) this last summer, its stock jumping 56 percent in the first day of trading. Salesforce.com, which rents its customer-relationship-management applications over the Internet, is the envy of many software companies, with revenue up 88% in its most recent quarter, to $40.6 million. The company signed 1,300 new customers in that quarter, representing 21,000 subscribers. Yet another example of the expanding phenomenon came recently when Autodesk Inc. (makers of the venerable AutoCad system) introduced an application for civil engineers available exclusively via annual subscription. Pay-once, run-forever perpetual licenses aren't the way of the world anymore. Autodesk gradually has been converting customers of its widely used AutoCAD application to annual subscriptions, too. Increasingly, companies are looking to maximize value by taking advantage of Hosted or On Demand software. Small and large companies alike can benefit from this new way of acquiring and using software. Many companies already outsource the hosting of their website, and the benefits are easy to recognize: increased security, ensured uptime, and expert support. For printers, there are even more advantages in using a hosted or On Demand software provider to deliver their applications, including: Low cost of entry Fixed monthly or quarterly costs No complex server hardware to buy or maintain Short setup time, improving the printer's time to market for new service offerings Better utilization of IT staff (essential, since most printing companies employ very small IT departments) Zero or low integration costs Software upgrades are done automatically Data backup is handled by the service provider Eliminates specialized IT infrastructure for the application as well as supporting applications. For example, if the application requires an Oracle or MS-SQL database, you would have to support both the application and the database Decreased need for Internet bandwidth at the printing site,because users interact with the hosted software provider's datacenter using the provider's bandwidth (which is usually provided as part of the application subscription fee) Increased system reliability, because the ASP will provide redundant infrastructure including support services, air conditioning and power, and Internet bandwidth Since the applications are usually delivered over the Internet, they can be accessed from anywhere, even by employees working from home or on the road Hosted or On Demand software eliminates the time and cost associated with installation, administration, and support of applications. With its lower total cost of ownership, quick deployment, ease of system updates and upgrades, 24/7 support, and increased security, an On Demand solution can be an excellent choice for small and medium-sized print businesses. Examples of printing industry-specific applications that can be purchased under an ASP or hosted model include: Job Submission Quoting Remote and Soft Proofing Sales Force Automation E-Commerce Print Management Information Systems With its lower total cost of ownership, quick deployment, ease of system updates and upgrades, 24/7 support, and increased security, an On Demand solution can be an excellent choice for small and medium-sized print businesses. Still, subscriptions and pay-as-you-go models are not suitable for all applications. Some complex software still requires customization and features that can't be delivered this way. And there is often a requirement for integration with other applications in your enterprise. EFI, for example, provides a number of print software applications that utilize this On Demand delivery concept. The PrinterSite family of Internet-based applications supports customer interaction and internal staff productivity, and some Print MIS systems are available under this model. By providing printers with new ways to do business and a higher level of support while reducing the cost of adopting new software solutions, IBM EFI and other forward looking vendors are helping printers increase their profits--and their control--over business growth.

 

 

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