Changing channels: New ways to do business

On-demand services are dominating our business lives

The proliferation of on-demand services in our personal lives has made many of us receptive to a comparable set of on-demand services to satisfy our professional needs. For instance, as we've become comfortable using online backup and storage services to store valuable pictures or musical play lists, we've also become more cognizant of the value of using similar services to protect our corporate documents.

THINKstrategies' research has found that past concerns about the security of Web-based services recently have been replaced by growing interest among companies in the off-site business-continuity and disaster-recovery advantages of these Web-based alternatives.

Although the hype about utility computing has faded, various manifestations of this idea are continuing to emerge. The most obvious is software-as-a-service, followed by managed IT services. These on-demand software-distribution and hardware-management service models are generating greater attention and accelerating revenues.

They also are producing new channel relationships. For instance, Salesforce.com is parlaying its success as the leading on-demand CRM and sales-force-automation application vendor into becoming a Web-services platform provider via its AppExchange partner program, and an online retailer with its new AppStore. Is Salesforce.com a better source of software than your value-added reseller (VAR)?

Google in 2006 started offering Web-based word processing, spreadsheet, storage and calendaring services to go with its e-mail services. Is it still a search engine company, an advertising machine or a software services company?

Amazon unveiled Simple Storage Service and Elastic Compute Cloud, utility-computing-style services that let individuals and institutions acquire computing power "in the cloud." Can Amazon be more successful selling grid computing than IBM or Sun?

In August, ADP acquired Employease, a software-as-a-service provider of solutions for human-resources management, to expand its portfolio of services beyond payroll. Is ADP now a business services provider or a software vendor?

In September, Cognizant, a U.S.-based offshore application-development and integration-services company, acquired managed-service provider Aimnet Solutions to add infrastructure management capabilities to its portfolio. Is Cognizant now an application-services or an IT-management company?

And last month, NetSuite, a provider of on-demand business applications, announced an integrated eCommerce suite for eBay-based businesses. Is eBay on its way to becoming a clearinghouse of on-demand applications for millions of small, yet rapidly growing online businesses?

If you can buy music at Starbucks or do banking at the supermarket, why shouldn't you be considering alternative sources or channels to market for your hardware and software?

These will be pivotal questions for corporate decision-makers and technology vendors, and will fundamentally change the business models of VARs and integrators.

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