Jeffrey Nolan has a link to ML’s launch of its On Demand index:
On Demand is more than just a software notion as the broader technology concept is about bringing much needed flexibility, agility, and execution capabilities to a business. This is not an investable or tradable index. MLODI is designed to help investors better track, measure, and understand the transformation of the software industry to the On Demand model. Very simply put, On Demand practices will change the way customers buy, vendors sell, and investors invest.
MLODI breaks the software market down into sub-segments for applications, infrastructure, and management. We look at how software is licensed and how it is deployed to determine our final MLODI score. Index scores range from 0 to 100, with 100 indicating a model that is 100% On Demand.
The overall software rating for the index at the end of 2003 was 20.0 or 13.1 excluding Microsoft and IBM. Enterprise Application Software had a 2003 calendar year rating of 14.5, with the bulk of the On Demand revenue coming from Microsoft.
On Demand is all about flexibility. The price/performance of technology components has improved so much that it is cost effective to build highly scalable computing platforms. The software that runs on these platforms is unique in that it can be comprised of a highly flexible set of components. This promises that business analysts and consultants can now represent their business processes in the software itself to a degree previously unheard of. The whole system can now be componentized to a level that allows one to scale up or down capacity, depending on the business needs at that moment in time. The signature features of On Demand software solutions are 1) term licensing and 2) hosted offerings – though it is possible to be considered an On Demand software solution having only one without the other.
