Gartner Confirms the Growing Appeal of SaaS and Utility Computing Services



It is always gratifying to have the major research firms affirm my perspectives and THINKstrategies’ predictions.

Recently, Gartner predicted that the global outsourcing market will grow 8.1 percent in 2008, and that this growth would not be in the form of traditional IT and business process outsourcing (BPO) agreements, but fueled instead by growing the acceptance of Software-as-a-Service (SaaS) and other utility computing services offerings by companies of all sizes.

Let’s have some fun and do a side-by-side comparison:

According to Gartner, “publicly reported IT outsourcing (ITO) and business process outsourcing (BPO) contract values decreased overall by 50 percent in 2007.”

In January 2002, I wrote in a NetworkWorld commentary that the traditional outsourcing model was dying. Even at that time, the size and duration of these deals was shrinking because their rate of success was abysmal.

As I’ve been stating for many years, companies of all sizes must focus on their core businesses and rely on third-parties to perform various IT tasks in order to withstand intensifying economic and competitive forces. This has led many to adopt ‘out-tasking’ rather than outsourcing strategies, in which they contract for specific services which can perform particular IT tasks. As I stated in a 2005 NetworkWorld commentary, this sourcing strategy reduces their risks. And with the advent of powerful new on-demand utility computing services and SaaS alternatives, companies can also gain greater business benefits.

So, now Gartner is catching on and predicting, “the outsourcing market has reached a tipping point with regard to utility delivery models, and that change and innovation will take hold and accelerate in this area through 2008 and beyond.”

I made my own prediction of this shift in 2004 and allusion to a similar tipping point in 2005.

Gartner goes on to state, “The trend toward software-as-a-service (SaaS) is gaining the most traction, with major software vendors, such as Microsoft and SAP, and large Internet players, such as Google and Amazon, making announcements about new SaaS offerings and mass-customized software platforms.”

You could have learned about the same trends from THINKstrategies four years ago if you read my commentary, “IT’s the services, stupid!”.

Gartner suggests, “User organizations need to realize that the utility delivery model is a viable alternative to traditional outsourcing, and they should seriously consider utilities in their sourcing strategies.”

Although Gartner prides itself about having the ear of the CIO, CIOs were telling me about their growing interest in SaaS and utility computing services in 2004.

So, if you want to stay ahead of the Gartner hype-cycle, stick with THINKstrategies and check out our latest writings and publications.







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