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
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
The idea of paying only for the IT and business processes
you need, when you need themmuch 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
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 gridsstrings
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 formidableespecially
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,
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
The writer is Managing Director, IBM