10.13.06

IT commoditization

Posted in Technology Ventures at 12:31 pm by Ray Wu

There are a set of software as service (SaaS) startups out there with mission to make it easier for business users. Some of these applications are pre-packaged software with well-defined functionality that users can use for a well-defined business needs, such as approver for document approval, echosign for document signing and tracking or joyent for team collaboration. Others are customizable to allow business users to develop their own applications on the fly.

These applications are more of a direct competition for traditional IT since users are now able to put together a simple and yet powerful applications directly by themselves without involving IT. The most notable ones are CogHead and Caspio. Teglo just announced its entry into the same market in the office 2.0 conference. The appeal for these tools is that they helps technology-savvy business users to develop custom applications that involve their own business process, data and knowledge, and then share the applications with their co-workers in real time.

This is very cool from a user perspective since now knowledge workers have a choice to either work with internal IT or deploy their budget somewhere, but this creates a nightmare for CIOs to enforce internal security policy and compliance. What it also means is that IT is now being commoditized from a different dimension. Developers in the US used to only worry about outsourcing. That worry has its foundation since it is pushing the developer hourly rate lower and lower (see the sample average hourly rate chat in oDesk). Now they have to compete in another dimension with these SaaS and customizable applications that again will take a slice of the low-to-medium end of the development pie.

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