Last week I attended several sessions of the Office 2.0 conference in San Francisco and saw many new demonstrations of office applications that are sold as a service (SaaS monthly subscriptions) - in contrast to Microsoft Office license purchase. My first question to myself was, "Why is this software genre taking so long to come to market?" After all, I've been watching demos on this for years.
Two speakers independently quoted a Harvard Business School study that said that new companies have to be 9x as good as the incumbent with most marketshare. Ok. In side discussions it turns out that "as good as" means that customer support has to be pervasive, easy, cheap, friendly, and long term. Anything else just devalues the software. It is the support, not the invention, that is so costly for young companies to initiate and fulfill. This brings me to the topic of data centers.
Years ago when I launched a social networking site, my advisors talked about transactions that would reside "on the wire" - the www one. Today, five years later, there was ample discussion about applications living "in the cloud" - that is, on a data center somewhere in geography but not in your corporate data center or your server at home. How else is your document going to float seamlessly between your mobile and your laptop for those 12 hours that you aren't in your office?
When pundits have talked about the move toward co-location services and the "death of the corporate data center" they were generally referring to the critical facilities cost, security, and power availability issues. But they weren't referring to this new cache of downloadable office applications that we've always owned or that arrived installed on our corporate computer. In Don Dodge's blog of April 2006 he says that SaaS was at 10% then and projected to grow to 25% of all software sales in 5 - 10 years. Is this projected growth in the SaaS channel poised to replace or augment the current ballooning in corporate data center demand? I don't know the answer...
Eric Hoffert, CEO of ShareMethods observed that many corporate IT applications are not multi-tenant on their own server stack. With the SaaS model one benefits from more efficiently-used servers in their co-los. I think that may be true today but not in the future as virtualization of servers and desktops takes root that distinction may not be as clear.
Eric Hoffert's data center, located in Atlanta, although ShareMethods is headquartered in New Jersey is SaaS-70 Type II certified. ShareMethod's provider is Appsite/Vericenter and their largest customers require that level of reliability - even while it tripled the cost of the service.
Eric defines a Green IT center as one where 20% power is from renewable resources, from its own co-generation or alternatively from a supplier that purchases carbon credits. While some of the data centers he considered did have solar panels none of those were SAS-70 Type II certified. Eric says he offered to pay a premium for a hosting service that met his green criteria but couldn't find one.
Lots to think about if Office 2.0 web apps are going to change our corporate data center densities... Have a green day!