From intranet to indenet
Morphing is such an applicable term for the information technology industry.
Technology often doesn't change; it morphs into something else. For example, the
Internet's influence is causing client/server computing to morph. Business
application vendors are scrambling to Web-enable applications.
The short history of business applications shows that businesses have
deployed applications as products or services. In the beginning, the prohibitive
cost of mainframes and software forced many businesses to rely on "timesharing
bureaus" to manage applications and data. In today's jargon, companies
outsourced applications to external "shared service" providers. Many
companies still manage applications such as payroll and human resources this
way. The big drawback of this old paradigm is restricted access to the data
because the service provider essentially owns the data.
The pendulum swung the other way as the cost of hardware and software
decreased and buying application packages off the shelf and implementing them in
house became viable. Applications became shrink-wrapped products, and a market
grew to supply installation, maintenance, and customization. In today's
client/server age, the drawback of this product paradigm is the cost of
acquiring, maintaining, and supporting the server and client software.
As the Internet begins to morph the client/server paradigm, the
pendulum will probably swing back, and business applications will again become
services rather than products. Some vendors are pushing the pendulum back: E3
Associates (www.com/e3 or 770-424-0100) has its ProfitTrack service bureau, a
sophisticated inventory management package that very large retailers use to
maximize their profit on inventory. The service bureau approach extends the
benefits of the software to small businesses that could not otherwise afford it.
Small retailers can improve their inventory management by linking their
point-of-sale terminals with a service bureau that runs ProfitTrack software.
Business application vendors and sophisticated systems integrators need to
think hard about the impact that, say, self-service information processing and
electronic commerce will have on whether they sell their wares as products or
services. Self-service processing and electronic commerce give internal
corporate users and external corporate partners access to business information
from anywhere, at anytime, via a desktop Web browser. As a provider or consumer
of that information, the user or partner does not know or care whether the
servers managing that application and its data are on a corporate LAN, WAN, or
intranet. If the data is secure, functionality is not restricted, and
performance is acceptable, the location of the server is largely irrelevant.
The stage is set for the introduction of the indenet, an
independent service provider's intranet that hosts a business
application that many external subscribers can share. The indenet's application
servers run the business application server software. They serve up functional
applets or HTML-format data to the subscribers' Web-based browser clients, with
appropriate access security. Indenet application servers are linked to "customer"
corporate database servers on a secured corporate intranet. The software vendor
or provider manages the application server software, but the corporation using
the indenet service maintains ownership and controls its data.
In theory, the indenet customer needs to own no application software, only
an Internet browser. The indenet customer purchases indenet access licenses that
let it access its intranet data servers through the service provider's indenet
application servers. This arrangement provides the ultimate in value-based
pricing because service providers can invoice indenet customers purely on a
usage basis, and indenet customers don't need to purchase application software
user licenses.
No one in the subscriber's business, except perhaps for a few system
administrators, needs any traditional business client software: All primary and
casual application users work with the data exclusively through the interaction
of their desktop Web browsers with the indenet application servers. Similarly,
the vendors, customers, and other extended-enterprise partners of the indenet
subscriber can have usage licenses to the indenet servers. This capability lets
business partners participate in electronic commerce in its many forms, using
the indenet subscriber's business system. The business partners can access the
business system in the same way that the data owner does--through the indenet
service provider.
Indenets are a terrific opportunity for application vendors to change their
business model to become service providers instead of product providers.
Indenets also establish a more logical division of responsibility for managing
business systems: The respective owners, the software vendor, and the data
creators and consumers maintain their software and business data.
Positioning the application vendor as the service provider that maintains
the indenet makes great sense. The vendor wrote the software and has the best
staff to keep it running and delivering optimum performance. The vendor can
manage software revisions efficiently because it has to upgrade only its inhouse
indenet servers, not hundreds or even thousands of distributed customer servers.
Meanwhile, indenet subscribers retain complete control over their business
data because the database server with the stored data is on the internal
corporate intranet. The business IS department can provide any other kind of
application integration or data access needed from corporate desktops because
the data and the data source is within its control. The Internet provides the
means to use platform-independent browser software to enter and access indenet
data.
The indenet customer does not have to purchase or maintain the server or
the client accounting software; the customer has to maintain only a database
server and a proxy (security) server that it probably maintains anyway for other
non-indenet applications. The indenet vendor can change its revenue model from a
product-and-maintenance basis to a subscription basis and reduce support
overhead (possibly, by an order of magnitude), which could lead to a much
healthier bottom line.
Previous
Register
