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Thursday, October 21, 2004excellent article on how various factors are influencing building applications as a desirable option.Open source, new tools/technologies, and offshoring make building an application (rather than buying) an increasingly viable option. For sometime it appeared, it appeared that buy was the best option.Conventional wisdom states that the entire market for packaged applications will consolidate to a few mainstream players, such as SAP and Oracle.This appears to be an oversimplistic and often wrong view. There are many markets and submarkets that continue and will continue to fall under the radar (and market size) screen of major vendors and require buyers to build a software application. Building applications is an option that never really stopped: Nearly two-thirds of all software capital spending is used to either customize existing or build new applications. But three new factors are bringing build back as an option that should be considered.
Factor 1 - Open Source - the main issue of open source is how fast it takes off. Smart users are looking at how far and fast they can take open source today. Smart buyers are looking at how to use open source to their benefit (as well as the detriment of competition). An example of a smart buyer is the use of open source by Google, which claims that it has the world’s largest running Linux cluster with more than 10,000 servers. An example of a smart seller is SAP’s gift of MaxDB to MySQL.com.
Factor II - Offshoring - The next leg of the trend to build is offshoring. Ofshoring directly attaccks the notion that building applications is expensive an time consuming. The ability to significantly drop the labor cost of coding begins to remove one of the large impediments to looking to build and by resource scaling to an extent reduce time for development. It does not, however, remove the costs and burden of long-term support.
Factor III - Web services technology promises to make customization even easier. An array of new tools has been introduced that is speeding development times. They range from delivering Web-service-based integration capabilities to composite application building tools that will assemble applications from a variety of customized and widely available application components. There are some significant challenges that these tools and Web services face before their reality matches their hype, but fast and easy-to-deploy applications are closer than ever. At the very least, Web services will make application creation and integration between business processes easier (and faster) than before.
-Building applications is a real option. Application packages can be overkill for the functionality required. Start to explore what open source has to offer.
-Revisit application decision tree to build applications. It was never a no-brainer to buy rather than build applications. It is even less true now. Revisit old assumptions and economies of building applications. Don’t forget to include total cost of ownership analysis as well as support costs.
-Investigate open source possibilities. While open source applications are in their infancy, the surrounding infrastructure and technology are coming up the maturity curve quickly. Look for opportunities to build uncommon applications around this technology base as well as to use open source applications for tactical, noncritical business processes.
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