Organizations that can’t afford the capital expense associated with modernizing their IT environments often turn to service providers for help. Clearly, companies that are able to take full advantage of their software applications are better positioned to compete and derive optimum return on their technology investments. But in the current economic climate, many firms lack the budget and resources to properly modernize their IT infrastructure and surrounding facilities. In these instances, it may make sense to consider alternate delivery models.
“Given the existing economic uncertainty, avoiding a capital purchase may allow improvement investments that might otherwise be impossible to justify,” writes Cindy Jutras, vice president and group director at Aberdeen Group, in her Analyst Insight report Enterprise Applications: The Cost of Keeping Current . . . Or Not (Aberdeen Group, January 2009). “In instances where deployment is provided as a service,” she continues, “time spent on upgrades is cut in half.”
Maintenance costs are also correspondingly lower. And because the service provider assumes accountability for systems performance, customers can extract better business results from their technology investments.
For example, through Oracle On Demand, customers can take advantage of Oracle’s software-as-a-service (SaaS) applications without making any up-front investments in software or infrastructure. Oracle’s prebuilt integrations enable these organizations to leverage existing investments while introducing new capabilities as business requirements evolve. These organizations have the assurance that they are always running the latest technology and are positioned to take advantage of future enhancements.
“Many CIOs are outsourcing IT operations as they realize how costly and inefficient it can be to run hardware internally,” says Phil Fersht, research director in the global services practice at AMR Research. “Additionally, today’s on-demand software applications have become quite sophisticated, so there is less risk involved in the deployments.”
In many cases, these outsourcing exercises are an important first step to modernizing the IT infrastructure. Oracle uses grid technologies to enhance Oracle On Demand services that combine the benefits of server clustering and server virtualization technologies so customers can minimize operating expenses with little or no capital investment. Additionally, by aligning business and technology strategies, Oracle positions these firms to capitalize on new product innovations and software management services.
Customers can choose where their technology assets reside, which is reassuring for many CIOs. They can have Oracle experts manage their applications onsite, at Oracle’s data center, or at a partner’s site. In all three cases, implementing managed application services consolidates and standardizes the IT environment, which accelerates upgrades and reduces operational costs.
“Oracle On Demand customers end up with a standard application platform going forward, which helps them take full advantage of the latest business functionality without a major implementation risk,” says Paul Van Amsterdam, senior director of Oracle On Demand operations. “Day-to-day operating expenses are much more predictable—and often much more affordable as well.”