IT Week: As vice-president of BMC's hosted business services, can you explain what you offer?
Jay Gardner: We started the business plan from September 2004, offering managed services around our business service management [BSM strategy]. Fifteen months later we now have 11 [managed service] offerings including some new ones added in December 2005. Managed services take traditional technology and deliver it as a complete managed service, in a subscription, pay-as-you-go package.
How does it work in practice?
There are three delivery methodologies, one of which is the hosted model, where there is nothing at the customer site – they just use the software, which is pre-configured and installed and can be turned on within a couple of days. One of the most popular hosted, on-demand solutions is our web transaction monitoring service, which has over 300 customers. It helps firms to monitor the experience of web users and also to monitor what is happening at various touch points throughout the world.
Why are hosted services becoming more popular for BSM systems?
Over the past few years firms have downsized, outsourced, offshored. [Hosted services] allow them to have the main player [in BSM] with the knowledge of IT processes, who can deliver systems in an efficient, scalable model at the lowest cost and which gets the job done. More and more firms want a return on investment quicker – they want investment today to be turned into a return on investment today.
Do hosted services appeal less to larger enterprises that have more in-house IT expertise?
Our experience is that as we have brought this to market it has really unlocked some big customers. In some cases customers have said they liked our products but could not buy the [traditional] licences because of resource constraints, such as not having the head count resources. But when taken as a service this [problem is removed].
Will hosted BSM ever fully replace traditional on-premises software?
There will be a long time of transition but there is a substantial growth opportunity, given how large the service marketplace is and that it's expanding – there is plenty of work for everyone. If software can be delivered in a more efficient, cost-effective way, the corporate world would get more work done. The business model has long legs and provides great corporate value – the goal is to minimise the investment going into managing the infrastructure so it can be put back and invested in new internet applications.
How should firms make the business case for hosted systems?
A recent survey said that 75 percent of most firms' budgets are spent on back-office systems – keeping the lights on. Only 25 percent is therefore spent on new investments. [Hosted systems are] all about how to make the management infrastructure and ongoing operations more efficiently delivered and managed so more money goes back to the [bottom line].
About Jay Gardner
Jay Gardner is vice-president for online hosted business services at BMC
Software.
Before joining BMC in 1988, he worked for 10 years at IBM.
