James Drogan

The April 22 print edition of The Economist contained an article titled "Universal service?" featured a lead line that

"Proponents of 'software as a service' say it will wipe out traditional software."

My 40 years of experience in the information technology industry suggests to me that this statement may be a bit overblown.

Ten years ago I worked on a project that consider this issue.   A graphic emerged from that project that can serve as a basis for continued discussion.

Software as a Service The notion here is that there applications of information technology that provide a competitive differentiation in the marketplace.  These are the pyramids.  It is difficult to see how software as a service provides any value for those companies for which this approach to competitive differentiation is critical to success.

The question is whether this approach to competitive differentiation will becomes more or less critical as time goes by.

Competitiveness changes over time, of course, and one can expect that those applications that once provided the competitive difference may no longer do so.  That is, they migrate to the box of applications that do not differentiate.  It is this box that that is apropos to software as a service.

The article takes up this notion of a combination of boxes and pyramids as a "hybrid model."  So, I'm not providing any particularly new insight, but only arguing that software as service is not a particularly new idea.

The interesting thing to me about all this is the dynamics of the marketplace that promote or inhibit the movement of application assets from the pyramids to the boxes.   Another interesting issue is what one does to remain viable in a market when all the pyramids go away.