SaaS: Diamond Or Dud? - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Software // Social
Commentary
1/22/2008
06:15 PM
Terry Sweeney
Terry Sweeney
Commentary
Connect Directly
Facebook
Twitter
RSS
E-Mail
50%
50%

SaaS: Diamond Or Dud?

Why rent when you can buy? Why lease when you can own? My accountant's smacked me around pretty good on both these questions over the years. Luckily we're not the target market for EMC's new online backup service, or other offerings envisioned under its newly formed software-as-a-service division.

Why rent when you can buy? Why lease when you can own? My accountant's smacked me around pretty good on both these questions over the years. Luckily we're not the target market for EMC's new online backup service, or other offerings envisioned under its newly formed software-as-a-service division.The move was neither a surprise nor unexpected. Hopkinton officials tipped their hand to this development last November, about two months after acquiring the parent company of online backup service provider Mozy. Under the plan revealed today, the MozyEnterprise backup service will be ganged together with EMC Fortress for high-end storage customers, beyond Mozy's entrenched SMB base. Leading storage VAR Verizon Business will pitch in here.

By some accounts, SaaS has awakened EMC (and other storage hardware vendors like Sun) to the revenue potential of software. The truth is, when storage hardware became a commodity game almost 10 years ago, EMC and the other large storage players began a frantic search for software-based products. It reached its apotheosis a few years ago when EMC spent billions to acquire VMware, Documentum, and nearly a dozen other software complements to EMC's disk and array business.

And done right, services can be a huge cash cow, as IBM has demonstrated for years. EMC has made it a stated goal to derive more revenue from services for some time now. Art Coviello, head of EMC security unit RSA, said a year ago that his division would be working closely with EMC to sell authentication, security management, and other synergistic offerings.

Recall that Microsoft a couple years ago also got squarely behind SaaS, and seemed to find a helpful advocate in the form of consultant Jeff Kaplan. Kaplan's still at it, and in fact makes some pretty good points about the overall benefits of the rent-don't-buy concept (not Microsoft's particular implementation of it).

And after all of today's many interesting economic developments, EMC and others may get to test Kaplan's theory that services are recession-proof. While an economic contraction doesn't mean that every managed service provider will collapse, it's likely to create quite a shakeout.

And that will be my accountant's cue to say, "I told you so."

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Commentary
IT Salary Report 2020: Get Paid What You Are Worth
Jessica Davis, Senior Editor, Enterprise Apps,  2/12/2020
Slideshows
10 Analytics and AI Startups You Should Know About
Cynthia Harvey, Freelance Journalist, InformationWeek,  2/19/2020
News
Fighting the Coronavirus with Analytics and GIS
Jessica Davis, Senior Editor, Enterprise Apps,  2/3/2020
White Papers
Register for InformationWeek Newsletters
Video
Current Issue
IT Careers: Tech Drives Constant Change
Advances in information technology and management concepts mean that IT professionals must update their skill sets, even their career goals on an almost yearly basis. In this IT Trend Report, experts share advice on how IT pros can keep up with this every-changing job market. Read it today!
Slideshows
Flash Poll