(Originally published on June 9, 2010, in Small Business Computing)
What is Hybrid Computing?
A hybrid computing platform lets customers connect the packaged small business software applications that they run on their own internal desktops or servers to applications that run in the cloud.
As discussed in What is Cloud Computing and Why Should You Care?, more software vendors are deciding to develop and deliver new applications as cloud-based, software-as-a-service (SaaS) solutions. This model helps them reach a broader market and serve customers more efficiently and cost-effectively. And, because cloud computing can often provide significant cost, time and ease-of-use benefits, more companies are choosing to buy and deploy cloud computing solutions instead of conventional on-premise software as new solutions needs arise.
However, most companies will continue to use a combination of both traditional on-premise software and cloud-based SaaS solutions. Think about it: You are unlikely to get rid of an application you’re running in-house just to swap in a SaaS solution. But if you need a new solution, you’re likely to look a range of options, including SaaS applications, to fit the bill. In some newer areas — such as email marketing or social media management — this may be the only way solutions are even available. In cases where you have a choice, you may simply decide that the SaaS model makes more sense, or that traditional deployment will work better for your company.
Why Should You Care?
Many software vendors with a strong presence and customer base in the traditional packaged or “on-premise” software world are developing platforms that provide new SaaS solutions that extend and integrate with their traditional on-premise applications. Some vendors provide app stores or marketplaces to make it easier for you to find solutions that will work well with those you already have.
For instance, Intuit has developed a platform and Intuit’s Workplace App Center so that customers can find and try applications that work with QuickBooks and with each other. Microsoft’s Software + Service strategy is designed to connect a myriad of Microsoft’s traditional software applications to Web-based SaaS solutions.
Recently, Sage launched its Connected Services offerings, designed to connect users of its traditional packaged software offerings with online SaaS services. The Sage e-Marketing application, for example, connects ACT and SalesLogix users with online email marketing services, while many of Sage’s accounting solutions connect with its new Sage Exchange online payment processing.
These vendors realize that most companies will use a mix of on-premise and SaaS solutions for a very long time. While companies can get some value from using some point solutions in a standalone fashion, in many cases, you’ll need to integrate the new SaaS solution with an existing on-premise application — such as integrating payroll to accounting and HR, or social media management to contact or customer management application — to get the value and efficiencies you need.
From the standpoint of their own corporate interests, vendors can increase revenues and profitability by selling existing customers new SaaS services (either their own or those of their partners) to connect to and extend on-premise solutions they’re already using. Having a strong SaaS play that is integrated with their on-premise solutions also helps them protect against competitive SaaS-only vendors that could steadily encroach on their turf.
More altruistically, these vendors want to offer their customers the means to bridge between the on-premise and SaaS solution worlds more easily. After all, it can be very confusing to even sort through and differentiate between all the solutions in a given category, and expensive and time-consuming to integrate them so they work well and easily with what you’re already using.
What to Consider
Most small businesses run at least a couple of on-premise software applications that are critical to their business. For instance, it’s a good bet that accounting and financials are on this list. Other applications will vary depending on the business you’re in, but could include things such as solutions to manage contacts and customers, projects, human resources, logistics or a function specific to your industry.
As you identify and prioritize new requirements to streamline and automate additional tasks, think about the overlaps they’ll require with workflows in the core on-premise solutions and processes that you’re using. For instance, if you decide you want to streamline payments processing, does your accounting software vendor provide a payments processing service that can easily snap into the accounting application?
By taking advantage of the SaaS offerings available from a vendor’s hybrid computing platform, your new solution will generally be up, running and integrated with the core application much more quickly. However, keep in mind that as you snap more services into that core on-premise application, your reliance on that anchor application will grow — arguably making it harder to switch should your needs change.
At the lower end of the SMB market I generally see two types of businesses: those that resist technology, and those that are more agile and eager when it comes to adopting SaaS offerings. As such, I see the former as not likely to embrace a hybrid model and the latter as more likely to switch over completely.
So I’m curious if you see hybrid computing as a stepping stone to full SaaS or an option that has some staying power.
Many companies will use hybrid computing as a stepping stone, and over time, most of their new adoption will be SaaS-based. But, I think that many companies will also continue to want to run a least a couple of things internally, so I think that the hybrid route will also be valid for quite a long time.
Start ups without any legacy on-premise software are a different story–I see a lot of them pretty much bypassing packaged software altogether.
Hey, thanks for sharing this. I really got a lot out of reading this article!