Do-It-yourself SaaS, a first step into the cloud?

Blogger: Richard Watson

This article on Bechtel’s strategy for reinventing its IT as an internal SaaS provider over at NetworkWorld is thought-provoking in many respects.  Leaving Bechtel’s infrastructure aside for a moment – I’ll leave that one for Drue Reeves in Data Centre Strategies to comment on - the exercise they went through in application portfolio management alone is astonishing, and surely some of their expected savings in IT budget is attributable to their leaner application portfolio.

I recently spoke to Annrai O’Toole, VP of Integration at the ERP SaaS vendor Workday.  We discussed walking his customers through a thought experiment like the process Bechtel went through: If you had to start again, would you start with your “development platform”: Java, Application servers, databases, etc.  He makes the case for an “application platform” based on ‘SWAG’ (Salesforce.com, Workday, Amazon and Google).

In this era of divestiture & enterprise reinvention – typified by the financial industry – that’s not too farfetched.   The landscape of investment banking is almost unrecognizable from the one I left 9 months ago.  The credit crunch has accelerated the process of disaggregating the banks into global holding companies (e.g. Citi), boutique hedge funds (e.g. funds have fallen by 20% on average) and specialized back-office service providers (e.g. Thomson/Reuters, ADP, etc.)  I’ve blogged previously on my skepticism for the success of migrating enterprise applications to a SaaS model. When an organization (or an industry) is reinvented, that issue becomes moot.

If enterprises feel they can fund such extensive portfolio management activities from OPEX, my punt is that we’ll see lots of it going on.  Over to Mike Rollings in Executive Advisory for his thoughts - Mike?