Collaboration on demand

To their evangelists, on-demand applications herald a new era of software. Their centrally hosted functionality, delivered over the web as a service, will free IT departments from some of the burden of managing central servers and local applications, enabling users to access their programmes and data anywhere the Internet reaches. The company perhaps most closely associated with this vision is, provider of customer relationship management (CRM) tools and a software as a service (SaaS) applications platform. Its vocal CEO, Marc Benioff, and a successful stock market offering in 2004 made Salesforce hard to avoid in any conversation about web-based business applications.

But, arguably, a more intuitive use of a technology accessible through a browser is not CRM, with its focus on sales leads and customer targetting, but the sharing of information and collaboration. Indeed, analysts at IT market watcher IDC recently identified online conferencing provider WebEx (and not Salesforce) as the pioneer and leader of the on-demand market, ranking it as the number one among the top 25 on-demand software providers. The company "has settled comfortably into its role as the 900-pound gorilla of the web conferencing applications market", says IDC.

Like Salesforce, WebEx uses a multi-tenant architecture – the same core application serves every customer. That makes for a more stable business model than the doomed application service providers (ASPs) of the late 1990s in which ASPs hosted specific instances of applications for each customer.

It is easy to see how the multiple facets of web conferencing lend themselves to the SaaS model. The basics typically include shared presentation, workspace and applications, but these are now being augmented by instant messaging and the integration with video and audio conferencing, often using voice-over-IP technology to bring the whole experience onto the PC.

Aside from e-meetings and presentations, other important uses include remote training, for example around regulatory compliance or IT support, reducing much travel and increasing business flexibility and productivity. The ad hoc nature of meetings means web conferencing is particularly suited to the SaaS model because its features and benefits are available without needing to purchase, implement and manage a stack of hardware and software that is only occasionally used. "WebEx was developed for the masses not for the elite," says Shawn Farshchi, CIO and VP of technical operations at the company.

And the ranks of those masses are swelling. WebEx served its 14,000 customers with 2.2 billion online minutes in 2004. Around 60% of those conferences involved people from more than one organisation, a fact that prompts Farshchi to argue that cross-company collaboration is much harder when collaboration tools reside behind a corporate firewall.

However, that raises the thorny question of which of the two models – hosted or internal – is more secure? Steve Frost, business development manager for IP communications systems at Cisco, has no doubt. He argues that the firewall – along with other security precautions built into its networking equipment – is vital for safeguarding company data. "A customer's network which is secure internally is the most secure facility to host a meeting on, because the security policy can be controlled," says Frost. "The fact that a service is hosted in-house doesn't preclude external users." Partners and customers can access meetings via the Internet or network gateways, he adds.

The counter argument is that while security is rarely a core competency for organisations who manage their own systems, the hosted providers make it a top priority – because their business depends on it. Part of WebEx's answer to potential customers with security concerns is to reassure them that none of their documents will ever be left on its premises, thereby removing any threat from hackers. "When [customers] hang up the phone, there is nothing left in the network," says Farshchi. He adds that WebEx is the only hosted collaboration company to use third-party security audits – not least of all from the US Department of Defense, which conducts its own scans of the WebEx environment every month.

Local versus hosted

While providing the basic technical requirements for a hosted collaboration environment may be a trivial task for most organisations, they need to cater for people joining web meetings from areas with a weak Internet connection. To prevent delays, WebEx's proprietary ‘Media Tone' network dynamically adjusts the image resolution depending on the user's bandwidth.

Whether or not they opt for an on-demand provider or use their own networks, analysts at Gartner note that the relative novelty of web conferencing means SaaS gives organisations a chance to try the technology without committing to long-term investments.

"The hosted model provides low barriers to entry for technology that is unfamiliar to many users and IT departments," said analysts Jeffrey Mann and Lou Latham in Gartner's rating of web conferencing vendors, which positions WebEx, Microsoft and IBM as leaders. Microsoft offers its SharePoint tools as ‘on-premise' software as well as having network service providers host them. Michael O'Hara, global head of Microsoft's Communications Sector business group, which sells systems to telcos, advocates a blend of the two. While advanced functions that might be used less often, like video conferencing, are more suited to provision as an on-demand service, other more informal collaboration tools such as instant messaging and voice over IP calls should be built into everyday desktop applications, such as Microsoft's Outlook and Word, to drive adoption.

"If you look at some of the early voice services connecting people, they rely on web portals to set functions and preferences," says O'Hara. "The usage of those web portals is somewhere in the 3% to 4% range of subscribers, so our contention is that until you start to get the VoIP features and functionality out onto people's common desktop they use every day, you won't really drive the benefits and adoption of VoIP for collaboration." IBM, with its Workplace Collaboration and Web Conferencing services, takes a more polarised view.

Having investigated the opportunities for hosted collaboration, Sabine Schlig, director of IBM's software as a service and business transformation for workplace, portal and collaboration, found that the enterprise market in particular will grow much more slowly than anticipated. "Talking to customers, they liked marginal functions like web conferencing and instant messaging as an opportunity to look at software as a service but they did not see core collaboration tools such as e-learning or email viable [as a SaaS] right now," she says. "Where they would be interested in going for a SaaS platform is with the introduction to new technology where they didn't know the IT requirements or how much they would use that service."

Gauging ROI

Schlig warns that many companies have not yet defined their policies for web conferencing. When employees adopt SaaS systems, rules are driven by how it is already being used rather than a cost-based purchasing decision. This user-led adoption might attest to the usability and popularity of hosted services, but it also highlights the potential challenge to security.

A study by David Coleman, analyst with specialist research house Collaborative Strategies, found that the on-premise model "has a faster cash recovery period and a superior ROI" than hosted services charged either per minute or per user, especially as the number of users goes up. Returns can be up to 247% better on-premise over hosted over a three-year period, he says.

Hosted providers argue user experience is paramount, and they can upgrade and improve their services for subscribers with no extra cost or configuration. Nigel Dunn, UK MD of Genesys Conferencing, says that ROI calculations cannot be generalised across companies because the specific areas where savings can be made are not always well understood. He says customers like glass maker Pilkington "can easily say they are saving 90% on a meeting without travel costs", but gains like training many people simultaneously to ensure compliance with Sarbanes-Oxley are harder to quantify.

In a technology sector that is rapidly growing, maturing and consolidating, many companies will still prefer hosted collaboration while they gauge their take-up of web conferencing, how easily it integrates with other systems such as CRM, and whether they will reach that tipping point where the economies of scale make it worth the upfront investment of an on-premise system. While that suggests that web conferencing may not be the application that heralds the end of software, it will play its part.

Avatar photo

Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

Related Topics