Both Lou Unkeless, Ariba's marketing and product guru, and Craig Federighi, Ariba’s technology mad scientist, gave similar disquisitions on the benefits and trade-offs of On-Demand during their respective presentations at LIVE. Many of you most certainly know a significant amount about the merits of On-Demand applications and services, but I thought I would share their thoughts here, as I think both did a good job at capturing ways of thinking about how to go about understanding which deployment model makes the most sense for individual organizations.
Both Lou and Craig argued that the number one reason to consider On-Demand is that one provider becomes the single accountable entity -- they own the entire problem and responsibility, and must guarantee delivery, a high-quality user-experience, and overall customer satisfaction. For relative straightforward or limited use applications -- based on the overall number of users -- like sourcing, the chance of deployment challenges and failure is not significant (except for business process and change management challenges, which are a different story entirely). But when it comes to applications with significantly customizable workflow capabilities and more complex ERP integration like eProcurement and EIPP, the chance of failure and challenges goes up considerably. Hence, an organization that chooses an On-Demand version of an eProcurement application should, in theory, have significantly lower deployment and operational risk than if they went with an installed application -– and if something does go wrong, there is no question about who is accountable. On-Demand sourcing applications obviously make sense as well, but for different reasons (lower TCO, more rapid updates, no IT required, etc.).
On-demand deployments present the antithesis to old-style ERP implementations where if things went wrong, the provider would point the figure at the integrator, the integrator would blame the provider, and the business would blame IT. With On-Demand, the blame game is impossible. The On-Demand world is akin to renting an apartment -- if a pipe bursts or the garbage disposal dies, the proprietor owns the problem. At the same time, though, the tenant gives up the flexibility of knocking down walls to put in a pool table or carting out the stove and cabinets to install a working, complete bar in a kitchen. But going back to my college years, I confess that I do know renters who did just this!