The January 11th issue of the Wall Street Journal included an interesting article entitled, “Bertelsmann AG Repairs Phones? Yes to Diversify.” The article described how the world’s fourth largest media company is building one of the fastest growing services organizations that is providing call-center services, repairing mobile phones, running printing presses and even storing medical supplies for companies such as Nokia, Microsoft, MacDonald’s and BG Group Healthcare SAS.

The service division, called Arvato, isn’t a new venture but a longstanding and major component of Bertelsmann’s business, generating an estimated $5 billion in revenue in 2005 via 250 operating units in over 30 countries. Arvato’s origins stem from Bertelsmann’s success outsourcing printing services as an extension of its core publishing business. It has leveraged its technical skills to generate over $500 million repairing mobile phones, and is now reselling its warehouse facilities … Read More »

THINKstrategies research has found that enterprises of all sizes are rapidly adopting software-as-a-service (SaaS) and managed services to overcome the hassles and costs of implementing traditional packaged applications and administering their IT/network systems.

A recent THINKstrategies survey, conducted in conjunction with the Cutter Consortium, found that almost a third of the respondents are already using SaaS and another third are considering SaaS, with the vast majority expecting to adopt SaaS in 2006. The survey also found over 90% of the current SaaS users are satisfied with this new application delivery model, 86.5% expect to acquire additional SaaS offerings, and almost 92% would recommend SaaS solutions to others.

Despite this ‘out-tasking’ trend, there is still plenty of confusion among enterprise decision-makers regarding the difference between SaaS and managed services.

Part of the problem stems from the efforts of various SaaS and managed service providers … Read More »

Salesforce.com, the poster-child of the software-as-a-service (SaaS) movement, experienced two periods of “intermittent access” of approximately three hours each on December 20.

While the company blamed the problems on an outside provider’s database cluster error in one of its four global nodes, this event frustrated the SaaS provider’s customers and could seriously hurt overall user confidence if it happens again anytime soon.

One of the primary reasons that web-enabled SaaS has gained user acceptance over the past year is because of the reliability of the various new services. Ease of implementation and use have certainly drawn users to SaaS solutions, but being able to access SaaS applications anytime/anywhere has been a key driver of customer adoption. Any suggestion that SaaS isn’t easy to access or readily available will significantly reduce its appeal.

Another hiccup at Salesforce.com will not only tarnish its reputation and … Read More »

Software-as-a-Service (SaaS), managed services, service-oriented architectures (SOA), utility computing, hosting and offshore services are relatively new concepts that are already fundamentally changing how organizations operate and serve their customers.

At the same time, more traditional aspects of the IT service business are also gaining greater attention. For instance, Cisco Systems’ executives admitted that the depth of Scientific Atlanta’s systems integration skills was just as important as the quality of its Internet Protocol TV (IPTV) products when Cisco decided to acquire Scientific Atlanta in November 2005.

Wall Street is also recognizing the escalating value of IT services as exemplified by the acquisition of Affiliated Computer Services (ACS) just before Xmas by a consortium of private equity firms, following the lead of a similar investment group that acquired Sungard in June 2005.

These are trends that I’ve been commenting on in various trade publications for … Read More »