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One of the biggest headaches with applications on demand is integration with other programs. Just because you can flip a switch to go live with new software doesn't mean it's ready to work with the rest of your systems. "I'm not hearing a lot of big success stories about integration with, say, SAP in the back office," says Forrester's Liz Herbert, who covers customer relationship management software. "[Software services vendors] are closing the gap in terms of customizing their applications, but the next big step is integration. As a technological issue, the tools just aren't there yet. The integration capabilities aren't there." (Early this month, SAP announced its own on-demand CRM service.)
Less integration means greater difficulty sharing data between applications, and a more cumbersome work process. It's a potential Achilles' heel for services marketed on their efficiency and ease of use.
That's not to say that integration with an installed base of applications can't be done, just that it takes more work than one might associate with the service model.
"It's hard to make new applications talk with the existing environment," says Berridge, who estimates that perhaps 70 percent of enterprise users are now trying to integrate applications on demand with other software, "up from maybe none a couple of years ago." What makes it hard? "You have to decide on the relevancy of data, and where it should live, just the same as in the premise-based world," he says. "And on-demand applications tend to have an amount of latency, so they don't accept large quantities of data at one time."
Millipore's Reiss singles out integration as the hardest part of a relatively painless Salesforce.com rollout last year. "If it looks like it's simple, it's not," she says. Millipore used Bluewolf and applications from New York City-based Vettro Corp. to help push Salesforce.com out to the BlackBerry wireless devices used by its global sales agents. Millipore is now almost finished tying it all back to an Oracle Corp. ERP system. "We were dealing with multiple companies and products, and we needed help to get that done."
Tying everything together right also has implications for security, especially identity management, says Tim O'Brien, a group manager with Microsoft's platform strategy team. "The infrastructure becomes super important," he says. "There are questions here in the early-adopter days of Web 2.0 about how it all comes togetheryou have to provide an ID to people, you have to have the infrastructure to manage and federate."
Many applications may someday run perfectly well on a Web browser, but that doesn't mean that desktop operating systems are going away. IT shops will likely be managing familiar technology for a long time to come. "We're not replacing Windows, because my guess is we'll always have something else to do on our laptops," says Phoenix's Bell. "Technology is often additive, not a replacement."
The same message comes, unsurprisingly, from Microsoft. "The limitations of the browser show themselves as the experience gets more complex," says O'Brien. "Look what's happening with Web 2.0 companies like Google, Yahoo!, and eBay: You've got these Web-based companies adding a lot of client-side software, toolbars, gadgets, putting more and more code on the client to take users beyond the browser." The bottom line, says O'Brien: "Offline capability is still very important for users. They want productivity maintained if services go down."
And go down they do. On Dec. 20, Salesforce.com experienced an extended service outage that lasted much of the day. The company vows to fix the problemsit is currently spending $50 million to build a new global data center architecture, which Senior Vice President George Hu says will deliver "full failover capacity."
But for some customers and vendors, uptime is not quite as big a deal as you might think. "To be honest, we've applied patches on our Oracle system that took us down longer than the Salesforce outage," says Phoenix's Bell. And Jason Fried, founder of the Chicago-based software firm 37 Signals LLC, which sells blogging software and related products, says 100 percent uptime is overrated. "Are you willing to pay for the last few nines after the decimal point?" he asks. "Downtime is like a bug in the software. You deal with it."