Making the Web PlayBy Edward Cone | Posted 02-06-2006
Web 2.0 Reality Check
Cliff Bell knows just where his cell phone is likely to lose its signal as he changes routes to avoid a Bay Area traffic jam, which makes for a handy metaphor as he discusses software as a service. "Yeah, sure," he says, when asked if a thin client and a fat pipe are all a company needs to run applications on demand. "And all you need is love, too." Then his phone cuts out, right on cue.
Bell is hardly a skeptic when it comes to software services over the Internet. He's the chief information officer at Phoenix Technologies Ltd., a Milpitas, Calif.-based vendor of core system software, with $100 million in 2005 sales. In fact, customer relationship management software, from service provider Salesforce.com, is one of the applications Phoenix uses most. "How software is delivered to me is less a concern than whether it meets my needs," Bell says when he calls back. "I can't think of any application I would not use as a service."
But Bell knows firsthand that the transition to software services will not be effortless for technology managers, as applications on demand finally penetrate the enterprise. After more than three years as a Salesforce.com customer, and a more recent move to Voice-over-IP telecommunications services from AT&T Corp., Bell says that CIOs in the services era will face their share of problems not only on the technology side but, just as importantly, in dealing with the cultural changes these services will bring to every organization.
"Software as a service is going to have a great run, but there is an adoption curve, an adoption challenge in the enterprise," he says. "CIOs have to look for the early adopters and the obvious value propositions within their own companies, but until they find them, it can be a tough sell."
As it turns out, the long-held concerns about software servicessuch as downtime and data securityare not the really big issues. More pressing: Suddenly business users can make their own decisions about features and adoption schedules, leaving IT scrambling to catch up on integration and support. The whole lengthy cycle of software projects is now on Internet time, and woe to the CIO who fails to keep up.
And running applications on demand is only part of the challenge ahead for CIOs as companies move into the next phase of the Internet. Newer tools just now making their way into large corporationssuch as blogs, podcasts, wikis and RSS feedswill require special care and feeding, too. These trendy technologies, sometimes lumped together under the rubric "Web 2.0," draw much of their power from their ease of use and a do-it-yourself ethic, much like software as a service. That doesn't mean, however, that they're ready for prime time, or that introducing and managing them will be headache-free for the IT department.
Read Ziff Davis' Stephen Bryant's Five Reasons Web 2.0 and Enterprises Don't Mix
In short, the next wave of the Web is upon us. Companies have adapted to the Internet in a variety of ways over the last decade, from electronic commerce to instant messaging, but the new Web services and applications will require yet another round of adjustments. That includes a little more technical muscle than some users may expect, and a lot of changes in the way IT and business units work together.
Supercharging the IT
Working closely with the business users of technology has been an IT mantra for ages, but the new Web rules supercharge the concept. Of all the issues raised by the anticipated service waveincluding problems with integration and scalenone are more pressing than the changes in culture necessitated by the new regime.
"There is a cultural shift, absolutely," says Bridget Reiss, vice president of IT at Millipore Corp., an $883 million biotech-products company based in Billerica, Mass., and a customer of Salesforce.com. "Our IT organization has changed a lot as our job has moved toward partnership and being more of a solutions providerit's less about bits and bytes. Our skill sets are changing. IT people tend to want everything perfect before they move on it. Now it's a different mindsetyou need to deploy in quarters, not years."
This need for speed is part of the service mindset. "Speed is the differentiator," says Eric Berridge, a cofounder of the New York City-based consulting firm Bluewolf, which deals extensively with software as a service. (Bluewolf also works with what Berridge calls "premise-based" applications, i.e., traditional installed software.) "You can bring applications live in a very short period of time, launch hundreds of users in a matter of weeks, so you have to have conversations in a short period of time, instead of taking a year to gather requirements. It's three or four conversations with the business, and you're expected to deliver applications that meet 80 percent of requirements."
Meeting this demand requires a new way of managing tech projects. "The biggest thing that CIOs need to be ready to retool for is the iterative process," says Berridge. "The change-management exercise, the thing you have to internalize, is that the new functionality keeps coming into use after you go live, and it's no longer wrapped around the IT group in terms of testing and release. You can release functionality in bite-size chunks over time, never having that big two-year wait to upgrade and go live. We see a lot of customers coming back to us and saying, 'This doesn't work,' and we say, 'Now it does. You haven't stayed current.' "
A danger in this situation is that IT can lose its relationship with the business. "One problem we've heard from our clients is that the pay-as-you-go model lets business users deploy without IT involvement," says Liz Herbert, an analyst with Forrester Research. "The challenge is that business users might not think about integration, might not understand service-level agreements or vendor contractsbut with point-and-click wizards, they can get into all that stuff themselves. The CIO needs to stay involved, or else three months down the road when a user runs into a problem and calls IT for help, it might be the first IT has ever heard of it."
Businesses can get used to this new relationship in a hurry, says George Hu, senior vice president of applications at Salesforce.com. "You give them a taste of things happening quickly, and soon they start asking for it." Adds Berridge: "Because business is now so heavily involved, they have the expectation that you should be able to do anything they want." His advice: "Don't fight it. We've seen organizations try to contain it, but it breaks through."
At Millipore, Reiss changed the way her organization delivered training and support to salespeople in order to keep up with the rapid adoption and learning curve with software services. Starting last March, the company began rolling out Salesforce.com, which now has 850 users. "We assembled a team of IT people, our 'Care Bear' team, and put them through a boot camp. Then we assigned them individual users around the world and made them responsible for training and support." That strategy allowed Reiss to stay ahead of the business users.
The rapid deployment fits in with the strategic goal set by new CEO Martin Madaus of doubling the value of the company in four years. Yet had Reiss not kept up with her users, the results could have been much less satisfactory. Users might have lacked a sense of ownership, and so ended up with less functionality from the service than it could actually deliver. IT could have lost credibility, and felt less invested in the project and its future support. "If the users had tried to do this on their own, it most likely would not be in global use," Reiss says. "It certainly would not be common between divisions, and it could have cost more money."
She adds, "IT definitely needs to think differently, because the users want more with services. But if the users think they can do it without IT, they're crazy."
Making the Web Play
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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."