The software industry has come up with a great new old idea. It won't try to shoehorn behemoth enterprisewide applications into smaller containers for small and mid-size companies, nor will it try to convince regular customers that usage-based software pricing is in their best interest. Instead, why not kill two birds with one stone by selling remote access to the application through a business partner?
According to Claire Gillan, vice president of applications software research at IDC, companies are already experimenting with that practice. Systems Union is outsourcing applications in developing countries; J. D. Edwards has launched a network applications solutions business; and SAP has at least one business partner that offers an outsourcing service for R/3. And lots of companies host collaborative software on Internet service provider Web sites.
The concept is nothing new. In the 1970s, we called it time-sharing, and although the value proposition centred on sharing costs of expensive hardware and proprietary databases, much of the value provided was from shared access to proprietary software. Many of the time-sharing firms sold software directly to their big clients to run on their own computers. This trend reverses the process.
The timing is right for this pendulum swing: first, total support costs will probably go up. Software vendors will have to support their access-selling partners, then those partners will have to support their customers. Partner support will be independent of partner volume.
Second, once users have remote access to the applications, they will begin to evaluate in-house alternatives (that's what killed the time- sharing industry). In the economic trade-off of pay-per-use vs perpetual licence, pay-per-use always comes across as more expensive (even if it isn't). Third, the value of the application may get subsumed by the value of a fast and reliable network, great account management, network technical support and the marketing prowess of the partner. (What happened to AT&T Network Notes and AT&T NetWare Connect Services?)Plenty to worry aboutFor users, there are plenty of things to worry about. The increased flexibility of renting remote applications trades off against training and integration issues when parts of the company have the stand-alone applications and others have network access. In time, the network access partners will add their own proprietary bells and whistles, which will make evaluation and selection tougher. And the same applications accessed via two different network access providers may act differently - or differently on two different days.
And because the software industry wasn't designed to sell packaged software that way, users will see lots of channel conflicts up close. It will take software vendors and their network access partners a while to get their sales commission acts together.