Enterprise Application has gone through a rapid evolution over the last two decades. In the mid 80’s with the advent of mainframe evolution, came the centralized computing with server centric applications.

In the 90’s with the advent of PC’s, the application landscape evolved into adopting the Client/Server model where the application was decentralized and some of the processing took place at the client side. In the mid 90’s with the emergence of the Internet and the Web, Enterprise Applications evolved into a web services model.

While earlier applications were more web-based applications using thin Web client, in the year 2000 we saw the emergence of web services standards or Service Oriented Architectures. Such applications used eXtended Markup Language (XML), a smarter way to communicate in the Web services world. As businesses became more global, the web services model based on the Internet has seen significant adoption over the last three years.

At the same time we can see a shift in IT architecture to more utility based computing model. In this model, server farms are clustered together to offer a multi tenant model where multiple customers and applications can share the same IT infrastructure. This model has transformed IT into a utility service like electricity or water.

The convergence these trends have led to the birth of Software as a Service or the “on demand” applications.

While the technology evolved, so did business needs. Traditional enterprise applications software model is license-based where customers pay upfront license fees for the software. The only way software companies could earn more money was to sell more features, functionality in the form of upgrades. As a result, applications became more complex and user adoption was slow.

A recent IDC survey showed that end users used only 16 percent of features available. This means that companies pay a large sum of money for features they do not use after they are deployed. Also, most implementations suffer from over customization, which leads to increased complexity and high support cost.

It is crucial to strike a balance between customizability, easy to use and functionality for success of the enterprise applications initiative companies. At Digiprise, we provide 20 percent of the functionality users use 80 percent of the time. Our user interface takes into account optimal paths for users, user clicks etc that can make the end user experience more pleasurable.

This is a 360-degree change on how enterprise applications were perceived or built. In the traditional software world, end users were forced to take certification courses from the software vendors to use the applications and this was a profitable revenue stream for vendors.

To conclude Software as a Service is an approach that can result in faster ROI for customers. In this new world of software, customers do not pay for upgrades. It does not take a few months and a large cost to implement but rather a few days to weeks and customers pay a monthly subscription fees just like they would pay for Internet access and other utilities.

This is not just good for customers but also for the software industry as a whole because recurring revenue streams can improve stability and steady revenue streams. Having said that, there are challenges that companies face. First is building a platform for integration with other applications with the same ease the model provides and vendors must be careful not to make the same mistake the large software vendors have done in the past.

While this sector is still emerging, IDC projects that it would exceed $12 billion by 2009. More traditional software vendors over the next few years will make the transition and have Software as a Service an integral part of their offering. This will also help penetrate a large community of small and mid sized businesses where adoption of enterprise application has been slow.



Venky Rangachari is the CEO of Sunnyvale, CA-based Digiprise, which provides
On-Demand Service Management solutions.