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Issue of January 2003 
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Techscope 2003: e-Business
The next utility: e-business on demand

The idea of paying only for the IT and business processes you need, when you need them—much like people pay for electricity services, is fast gaining ground. by Abraham Thomas

Thirsty? Turn on the water tap. In the dark? Flick on the light switch. Looking for e-business solutions? E-business on demand makes them just about as easy as working with any other utility.

Customers don't spend millions of dollars to build a power plant to meet their needs for electricity. So, why should they spend millions to build their own e-business infrastructure?

The idea of paying only for the IT and business processes you need, when you need them—much like people pay for electricity services, is fast gaining ground. This concept, which IBM calls e-business on demand, refers to the delivery of standardized processes, applications and infrastructure over the network as a service that lets you pay for what you use. That's because IBM is making e-business services as fast, cost-effective, reliable and flexible as gas and electricity.

The market for e-business on demand is growing rapidly. The global opportunity is pegged at $25 billion for 2002, including hosting, managed services and IT outsourcing, escalating to $107 billion by 2005. This also includes data storage, Web hosting, and e-procurement.

A wide range of e-business services are managed, hosted, serviced, upgraded and delivered to your door without the need for you to worry over the details. With e-business on demand, end-to-end e-business can be as accessible, affordable, and as easy-to-use as water, gas, the telephone or electricity.

E-business on demand is a logical and complementary extension of traditional IT outsourcing. Conventional outsourcing involves the delivery of a dedicated, customized infrastructure, with technologies and services tailored to an organization's unique needs. This model often entails the transfer of human and physical assets from the customer to the service provider, who in turn "leases" those resources back to the customer.

Traditional outsourcing is similar to e-business on demand. In that, IT is provided as a service that leverages the provider's expertise to support a cost-effective, reliable technology platform. E-business on demand adds a number of important innovations to this successful model: essential infrastructure components that include business processes, bandwidth, hardware, middleware & software, managed services and process know-how. These elements are supplied on demand to a well-guarded e-business community whose "residents" can access capabilities as required.

CIO's and IT managers can apply e-business on demand to help control costs, improve implementation and cycle times, reduce risk and more directly correlate IT spending with business returns. Companies pay for the IT they need. Infrastructure, processes and applications are security-enhanced, automated, pre-qualified and pre-integrated. Systems and skills are best-of-breed. Upgrades, operation and maintenance are furnished via the expertise of the service provider, who is responsible for supporting optimum IT efficiency and desired performance levels. Value accrues exponentially, minus the costs and complexities associated with owning and maintaining a dynamic e-business environment. Basic services are mass-customized, enabling IT organizations to shift their attention to aligning e-business strategies, gaining differentiation and forging new relationships, dynamically. IT becomes an asset, not a liability.

E-business on demand signals the coming age of computing, in which the provision of IT resources will be autonomically administered and dispensed from huge computing grids—strings of servers linked logically on the Internet and supported by open protocols within a security-rich, standards-based environment. Grids can regulate demands and tasks, day and night, without the need for human intervention. Customer needs dictate processing requirements.

E-business on demand, while simple to utilize, requires experience and know-how to deliver. The very practical aspects of delivering this new model are hard-won.

The expertise it takes to administer complex infrastructures and remove capacity constraints is formidable—especially considering the rate of technology innovation and business uncertainties that can alter requirements at any given time. When turning to a service provider, companies should look at people who have extensive experience in addressing business, industry and technological challenges.

By giving up the burden of IT ownership, a company can vastly increase its access to computing power, expertise, and innovation.

For large companies, it's a saving of millions in upfront investments in hardware, software, integration, and hiring. For growing companies, it's the sophisticated network of a larger competitor at a fraction of the cost.

The writer is Managing Director, IBM India Limited

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