On-Demand Apps Break Enterprise BarriersOn-Demand Apps Break Enterprise Barriers

The barriers to enterprise use of utility applications seem to be crumbling away.

Small and midsized businesses, often with no previous application in place, have been flocking to on-demand applications such as Salesforce.com. The opportunity is so inviting that new services continue to roll out. For instance, Adaptive Planning just debuted a planning, budgeting, and forecasting utility app aimed at the midmarket. The application service providers (ASPs) aren't satisfied to stick with the low end, however. They are aiming themselves upmarket and already are serving some large enterprises.

But will the ASPs be able to fully realize their upmarket ambitions? One objection for large enterprises — the complexity of integrating applications that lie outside the four walls — faces a countervailing proof of concept. Grand Central Communications is a service that allows objects (including ASP applications) to be exposed as Web service "end points" on its Business Services Network (BSN). In a graphical environment, you configure your processes to move and translate data. Your own end points (public or private) can be anything Web-services enabled: a proprietary application, Web browser, or handheld device, for example. Developers can join free to create and store "connectors" to add their end points to the network. You can use scripts published on the developer network to automate exposure of changes in services you provide, so presumably maintenance isn't much of an issue. You pay only when you start moving data over the service, with tiered fees analogous to mobile phone "minutes per month" plans. If you cancel midmonth, you even get a prorated refund. (I tried to find a flaw. I was dubious about the maintenance aspect, for instance. But all I could find was that, unlike many phone services, they don't have a rollover plan.)

Companies are using Grand Central now. One is transferring records from an HR system to ADP for payroll processing, for instance. Some companies are even "productizing" processes they've created on the BSN. One of them, Inside Scoop, reports it has already reached profitability, due in large part to the quick time to market and total lack of purchased hardware or software.

Sun CEO Jonathan Schwartz calls it the "Google-ization" of business applications. Consumer ASPs, such as Google and eBay, enjoy success because they're relatively ubiquitous (because they're not tied to your hardware) and reliable. Schwartz thinks the utility model is the wave of the future for CPU cycles and business apps alike. But Schwartz also states that utility applications aren't customizable (and shouldn't be), and gives this as one reason that not every kind of business application is appropriate for the service model. However, Salesforce.com just launched Customforce.com, which will allow users to customize their services — without the help of a software developer. Any changes made with Customforce.com will automatically be reflected in the Salesforce.com end point that already exists on the BSN.

So, without buying hardware or software (other than a PC with Web browser), you can use an application, customize it, and integrate it... or even create a product. What's missing? Full enterprise functionality. But, as I mentioned, the ASPs are working on that.