Recently, Oracle struck separate agreements with longtime rivals Microsoft and Salesforce.com to partner on cloud-computing technology and distribution. Also recently, SAP announced plans to launch a cloud service for HANA analytics.
What’s going on here, and what does it mean for those of us on the enterprise IT support services side? Basically, the software infrastructure that underlies many businesses is migrating to the cloud, where many of the applications we use in our personal lives have been for years.
And that shift to the cloud offers both advantages and a few cautionary notes for businesses whose IT support or managed IT service providers are evaluating a cloud-based option.
Pricing the Cloud Model Remains Tricky
One thing to watch in making your move: Vendors now adapting to the cloud space are still working to tweak their prices in the cloud model.
According to a report from PricewaterhouseCoopers (PwC), the cloud model is driving a big shift in the way software vendors approach pricing. PwC says that where the earlier licensing model laid most risk on the customer, newer SaaS models place more risk on the supplier – prices increasingly will be subscription-based.
On the customer’s side, the change could effectively look like a price increase. Take for example the recent announcement by Adobe that it would stop developing its flagship Creative Suite in order to better support Creative Cloud, a subscription-based service. Favorite apps such as Photoshop and Premiere Pro will be available only on a monthly subscription basis.
Some users have complained that the new fees amount to a “renting” of the software at prices higher than the previous model – and that could be increased at any time. They’ve even started a petition at change.org.
Big Payoffs in Flexibility and New Big Data Capabilities
On the flip side, a significant benefit to subscription-based pricing is regular upgrades that don’t require any implementation. The cloud model brings other advantages, too.
Consider Oracle, which already has excellent cloud technology. What it didn’t offer before, though, was flexibility with hardware. For a cloud user, flexibility is a key driving force – flexibility in the number of seats being used, in the number of devices that can be supported and in the hardware [read: mobile devices] on which on the software will run. With its new agreements in place, Oracle can now promise companies to deploy its software – such as Java, Oracle Database and Oracle WebLogic Server – on lean, virtualized platforms such as Windows Server Hyper-V or in Windows Azure.
SAP, as another example, has tapped Savvis Inc. to market its HANA database platform as a subscription-based service. HANA is still a relatively new product for SAP, with a reported 1,000 enterprise customers. HANA’s core differentiator is its real-time computing prowess; a retailer can, for example, can use it to calculate which toys are selling fastest in the run-up to the holidays and appropriately tweak inventory.
Add it all up and many businesses may increasingly find reasons to stay the course with their legacy software providers as they move to the cloud. The recent business alliances announced by Oracle and SAP are designed to encourage it.