In Like a Legacy, Out Like an E-business

Software Magazine, June, 2000 by Colleen Frye

An outgrowth of the ASP model is the notion of the software utility, where companies only "rent" the application when they use it. Intermedia Group's Kara says that while IT buyers express interest in this pricing model, it is still more concept than reality. Among the Software 500, only 6.2% of companies said they offered a "metered" pricing scheme for their software.

While ASPs are a budding story, "Linux was one of the big stories of '99," says Al Gillen, research manager, systems software, International Data Corp., who is based in the Iselin, N.J., office. "It's breaking the pricing model, causing disruption. It's never bad news when you have another product out there to negotiate with Company A about."

Among the Software 500, 35.4% of the companies reported that their primary products support Linux.

Linux still has a way to go, says Gillen. "It lacks complete application support, it won't handle transaction-intensive application, it doesn't have rich middleware, it's still maturing. It is being used as a functional server with a single use. We're finding it showing up in a lot of shops."

"I use Linux here for my mail server," says Spyder's Smith, "and I'm quite happy to keep it as that; it's maintenance-free."

Cleveland-based Third Federal Savings and Loan is also using Linux in some niche roles as a lower-cost alternative to Unix, says Ralph Betters, CIO. "We're getting some decent performance and doing some experimenting."

IBM has moved aggressively to support Linux, says Gillen, while other vendors such as Unisys and HP have said little about the open source phenom. And "Sun has avoided articulating a Linux strategy," says Gillen. "Sun sees Linux as Unix on training wheels."

Battles on the operating systems platform front, and by extension, the hardware platform, continued in 1999, particularly the Scott vs. Bill show. Witness Sun, giving away software--Solaris and StarOffice. Giving away Solaris on Intel "is Sun's attempt to grow their customer base, and add competition to Win2000/NT by offering an alternative," says IDC's Gillen. "It's the same thing with StarOffice. There's no direct benefit to Sun other than it's bad for Microsoft, plus it generates more interest in their product line."

On the Windows front, IT leaders like Third Federal's Betters are "trying to determine the affect of Win2000 and how it will play out in our lives, not only on the desktop side but the server side. We'll be dealing with vendors as they get their software compliant and certified." Betters says Third Federal is in the process of evaluating an upgrade to Win2000.

Another trend generating interest among many market segments in 1999 was XML. Among the Software 500, 47% of companies said their primary products now support XML.

IT shops like XML, too. TransCanada's Smith says the next version of their order entry system will be built in Java with an XML front end. "It's definitely an enabling technology. It simplifies the integration of applications from a time-to-market and maintenance cost. It has allowed us to integrate best-of-breed technology at a lower cost point."