Flexibility may trump security fears

The hosted applications model eliminates expenditures on servers, software licenses, and other upfront IT costs. But the ability to quickly flex the number of users may be the model's biggest draw. This benefit is cited as one reason Lam Research Corp., a manufacturer of semiconductor fabrication equipment, was drawn to an "On-Demand" hosted product life-cycle management (PLM) offering from IBM.

IBM announced in June that Fremont, Calif.-based Lam will use PTC's Windchill PLM software on an as-needed basis that will, according to Steve Newberry, Lam's president and COO, give Lam better "responsiveness and flexibility to move with the market."

Marc Halpern, research director for PLM with Stamford, Conn.-based analyst firm Gartner, sees several benefits to the On-Demand program. "For one, you don't have to deploy the software in the usual sense," he says. "Second, you don't need internal resources to maintain the system. Third, you pay only for what you are actually using. On the downside, you are less the master of your own destiny. Some companies just aren't comfortable with [PLM] data being outside their four walls, either for security or performance reasons."

Halpern calls the security fears mainly "psychological," given the ability of major vendors to run secure data centers, but he adds that some factors should be negotiated. "There should be built-in safeguards related to things like downtime, quality of service, network and backup capabilities, and service response time," he says.

Another area to evaluate, says Halpern, is the level of software configuration and data migration the pricing includes.

Hosted PLM is not exactly new. Halpern notes that Arena Solutions has long used the approach and currently has more than 170 companies using PLM's hosted solution.

John Stuart, a PTC senior VP, says in the past PTC has partnered with a data center operator to host applications for a few customers, but the IBM offering is different in that IBM brings together all the software, services, and technical infrastructure under one roof.

Stuart concurs the pay-as-you-go model makes sense for many companies that may need to ramp PLM use up or down rapidly. "Especially in high tech and electronics, we see this program as a perfect match, because of their cyclical nature."