The data problem with On Demand Software

With the list of software solutions being offered as a hosted service growing daily and the innovation behind them spawning some very killer applications, it can be all too tempting to either migrate some of your legacy applications off premise, or perhaps take use of some new service that was not previously available to your company.

Denis Pombriant raises some interesting points in his post Keeping Up with On Demand about disruptive technology ushering in a new set of leaders. I agree, and think that the tide is shifting.

We need to be mindful that as the water turns over and companies like Microsoft loose market share to guys like salesforce.com the lake is getting murky and a new set of challenges is bubbling to the top.

Utilizing hosted software can be extremely cost effective and rewarding (my company uses several hosted applications to run our day-to-day operations). However, before you sign-up for that next 30-day free trial for that new application that is going to reinvent your business you need to ask some critical questions:

1. What data is the application storing?
2. Where will it be housed?
3. How do I access it?
4. How can I integrate it with the rest of my enterprise’s data?

Each vendor seems to have their own answer to those questions. Now, I personally think Salesforce has the right idea with app exchange. By utilizing their platform for all of your hosted applications it makes the integration piece far easier. They also rely heavily on their 3rd party partners to provide the data access and synchronization (synchronization is a huge pitfall which I will address in a future post).

This model works well if you are standardizing all of your applications to their platform. However, this doesn’t play well in an environment where you need your customer data integrated with the rest of the enterprise; or even worse if you are using different service providers for different applications. Imagine using one provider for your CRM, another one for you ACD, and yet another for ERP. As you can see the data web that you spent years trying to unravel with your legacy systems can very quickly get re-spun.

Therefore, for any provider to survive in the hosted space they will have to extend solutions to their customers that solve the data fragmentation issue.

Unfortunately, not all software hosting providers have figured this out yet so it can be difficult, if not impossible, to access your data that’s off-premise. Some vendors offer Web Service based APIs to move information back and forth, yet others rely heavily on the old fashion flat file to ftp post, or manual csv exports. This process takes us back about 10 years and will no doubt take you off the Christmas Card list from your DBAs.

Now, at first blush you would think there is a play for guys like Cognos and Business Objects to host their Business Intelligence platforms and help address this; but when you strip it down all that will do is move the problem from your data center to the "cloud". I would look for niche BI players like Latigent to drive innovation and solutions in this area.

-Chris