Sun Outsources Software as a Service
Sean Murphy, Associate Editor -- Supply Chain Management Review, 1/17/2008
Sun Microsystems, the company known for its hardware, software, and networking services, is planning on eliminating as many of its own data storage centers as possible, in favor of third-party software-as-a-service data management.“There’s no doubt that that’s our vision,” said John Dutra, the CTO of Sun’s IT group.
Right now, the company has already outsourced data storage for its payroll, human resource systems, and employee benefit systems such as stock options management and 401(k) programs to several third-party companies which Dutra declined to name.
The companies, Dutra said, are responsible for handling detailed employee medical information, social security numbers and other sensitive data.
Sun’s not finished, either. The migration of data handling to outside companies has reached “the edge of our network,” Dutra said, meaning third-party companies are now beginning to handle Sun’s internal intranet services, some of which are now accessible to Sun employees from outside the company firewall.
Within the next few years, Dutra said the company will be offloading even more data handling. Today, it has seven “data centers,” or data repositories, but by 2012 Sun is planning to reduce that to three, and in a perfect world, Dutra would like to see none at all, with a total conversion to software-as-a-service data management.
Question: Why? Why would a corporation built on technology, corporate networking and IT services want to put such sensitive information, indeed the totality of the company’s data, into someone else’s hands?
Dutra said his company is seeing the sense in software-as-a-service, an industry that is rapidly expanding. Small businesses already see the benefits of hiring third parties for data management, since it means those businesses won’t have to build and/or maintain servers and other expensive equipment.
In fact, in a recent article in Supply Chain Management Review, experts from research firms such as AMR Research have predicted that this year, more and more supply chain managers will be looking to software as a service, both on the domestic and global levels.
But large corporations, Dutra said, can benefit, too. Sure, Sun can afford mammoth servers and the staff to run them, but no matter how hard the company works at it, all it will have in the end is an expensive data management system that is, overall, unremarkable compared to many other similar systems built by other corporations.
With no distinct competitive advantage in maintaining such systems, Dutra said the solution is obvious: get rid of them. Dutra said Sun will be free to concentrate more on other IT-related matters, once data management is no longer necessary.
“This is not spelling the doom of IT. It’s the natural progression of the profession,” he said.
As to the security risks, Dutra said he is holding the third-party companies to higher security standards than Sun’s own, but in truth, he believes the providers are experienced enough to handle the job safely.
“These are not fly-by-night organizations,” he said.
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