Tuesday, November 21, 2006

Double Whammy

It isn't always the case that value can migrate in an established value chain. But the possibility clearly is there as "software as a service," Web-delivered and other "hosted" services start to gain popularity in the small/medium, enterprise, government and non-profit market segments. The reasons are pretty simple. Today, premises networking is complicated. Things break and drift out of tolerance. Lots of new applications are appearing and the variability of end user preferences is increasing. All of that creates management headaches that value added resellers, system integrators and Interconnect firms make a living on.

So what happens if software migrates off the premises, and "into the cloud"? Complexity doesn't disappear, but it does migrate. Into the remote data center. Which means there is an opportunity for a rearrangement of value. Providers who run data centers, host applications or provide applications then could become larger providers of value as ways to mimimize premises networking complexity.

Also, look at the areas where a recent Yankee Group survey of mid-market executives suggests value can be provided: business continuity, remote worker support and wide area networking. All features and services WAN providers, hosting providers or hosted apps can provide. It's a double whammy. Provide features IT executives and "C" titles already say they highly value, and reduce chores associated with the premises network at the same time. Shift happens.

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