The On-Demand Mathematics of Enterprise Computing: Change in Computing Will Not Be Limited to Technology-It Will Influence Business Models for Every Company Competing in the Traditional Software Arena

By Pombriant, Denis | CRM Magazine, September 2006 | Go to article overview

The On-Demand Mathematics of Enterprise Computing: Change in Computing Will Not Be Limited to Technology-It Will Influence Business Models for Every Company Competing in the Traditional Software Arena


Pombriant, Denis, CRM Magazine


IDENTIFYING a paradigm shift is easily done in hindsight--separating a fad from a long-term trend is something that requires some historical perspective to get right. The only professionals who make a habit of prognosticating about changing trends are economists, and as the saying goes, they have reliably predicted 13 of the last five recessions.

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Some people regard on-demand as a passing fad or, at most, an alternative delivery model. Others hail it as the harbinger of a new world. Many billions of dollars have already been spent to secure on-demand agility, and future investments (and long-term consequences) hang on which of the two opinions regarding the model is right.

The kinds of secular change taking place all around us in technology today might occur only once during a long period of time, but those changes can significantly alter everything that follows them. Alternative secular change, disruption, is far more common--we see disruptions in the marketplace almost constantly. The ratio is, disruption : fad :: secular change : long-term trend. In most cases, a secular change is initially seen as a common disruption and for good reason--initially secular changes are, in fact, nothing more than disruptions.

In Dealing with Darwin, Geoffrey Moore identifies two basic business models, complex systems and volume operations. Complex systems represent the early adopter phase; volume operations identify a mass-market phase. We have been most accustomed to seeing volume operations models succeed as one disruption after another has toppled complex systems models in a succession of software generations, from accounting and finance to the front office.

There are no more green fields left in the software today, no major systems areas that have not been automated; even new on-demand applications focus on optimizing what other systems already do. The software industry is in a secular shift from complex systems to volume operations, and that is the reason on-demand computing has an air of inevitability about it. …

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