Will You Rent Your Enterprise Software from Amazon?

Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom, transportation and energy.

A couple of weeks ago, Amazon pushed the envelope once again by expanding its offerings to include an enterprise software retail store. Quentin Hardy of The New York Times blogs:

"Amazon.com's Amazon Web Services business, facing looming competition for its business of renting online data storage and computing, is introducing a store where customers will be able to rent business software from a number of third-party providers, including I.B.M., Microsoft and SAP...The store, called AWS Marketplace, will use the Amazon Web Services billing and fulfillment system. Payments will be based on use, either by the hour or the month...The offering appears to be something of a blend of the software as a service, or SaaS, business of companies like Salesforce.com and NetSuite, and the mobile app stores popularized by Apple and Google."

Should we be surprised by the e-retail giant's move? Not really. Amazon has used its highly-successful retail model to make a significant impact on IT. Come to find out, selling storage and other infrastructure components is not all that different than selling books. I had the opportunity to speak with David Rosenbaum of CFO.com about this very topic:

"Amazon has become a tech provider...We've been hearing about cloud computing for at least five to seven years, but in many ways it's Amazon who's finally brought the real goods...You engage with IBM or SAP about buying a fraction of an enterprise app and you throw a couple of weeks of your life away (in sales pitches and 'scoping' meetings). With Amazon, it's 20 minutes if you know what you want."

Will Amazon's move into enterprise software change the dynamics of SaaS purchasing? Perhaps. There is a good chance that this will drive less pricing transparency, not more. It could also lead to the rise of a non-negotiable, one-size-fits-all purchasing environment. IT sourcing departments need to carefully factor in the obvious and hidden switching and implementation costs that are part of that "easy" buy.

What do you think? Do you think Amazon's offering will simplify software purchasing? Or simply sweep the complexities of IT buying under the rug?

-- Jeff Muscarella, EVP of IT, NPI

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