Articles today in the Austin Business Journal and virtualization.info seem to indicate Surgient is exiting its hosted service business. Trying to compete in both a packaged software and a ‘SaaS’ type business is rarely a great business strategy – each requires a different approach for software delivery, sales model and support.

Surgient’s hosting business was built around a single-tenant, traditional hosting model. Given the huge industry momentum towards cloud computing, it indicates this type of hosting may not be as profitable (or appealing to customers) as it once was, especially for highly dynamic environments. Building hosted infrastructure for a specific customer requires a large capex hardware purchase, managed services, and a term contract for at least a year. Given there will still be issues around underutilization of a single customer’s hosted environment and lack of burst capacity for peak demand, it’s not surprising Surgient is looking to exit this business.

A multi-tenant cloud service, such as Skytap Virtual Lab, offers a number of advantages to customers over Surgient’s hosting business model. It offers:

– On-demand infrastructure

– Utility billing

– Month-to-month contracts

– SaaS delivery of virtual lab management application

– Pre-populated virtual machine library

– API for managing cloud infrastructure

– Global access from any browser

It also means we can keep our costs down to make virtual lab automation broadly available to all customers (not just the Fortune 500). Given the industry traction around cloud computing, it’s likely that many customers who want to transition from their current existing hosted lab environment or outsource their in-house lab will be looking for solutions such as Skytap in the future.

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