About five years back I was thrown into a ‘business strategy off site’ session with my present employer having just joined them the previous week. Not knowing all the players around the table in a conference room at a suburban office park motel I determined that keeping a low profile was the best approach.
By mid-morning, perhaps due to the abundance of free coffee and lots of sugared breakfast treats, the tenor of the meeting got pretty hyperactive. The marketing execs were outlining their vision for growing the company through a new licensing scheme centered on the user only paying for what they used. The Founder, a man with long years of technical experience from programming through customer service gigs with literally the largest companies in high tech, was not taking well to any of this. Sitting there wide-eyed I observed that when the physical and emotional tone reached its crescendo the Founder stood up, raised his arms to the ceiling and shouted “This is the death of software as we know it.” And so it always has been.
Currently we are all digesting the swirl of information that’s throwing terms at us like “intelligent workload management”, “cloud computing” and “SaaS” [OK, that’s an old one; but often misunderstood]. But what have these got to do with software appliances? And does a software appliance address any of these issues? We think it does.
The basic components of software tools and applications have changed little since the 80s. No one has invented a new operating system or “the killer app” in a number of years. What’s changed in software as we know it are the delivery methods. To paraphrase the marketing truism: “The medium is now the most important part of the message.” How companies, administrators, and users get their software is now as important as the software they get. Delivery via a software appliance is the best way to distribute, install, and configure software across diverse corporate geography, user types, operating systems, and applications.
More importantly from the ISV’s perspective, an appliance allows immediate delivery, installation and evaluation. That shortens testing time and often, very often we’ve found, shortens the sales cycle. Snail mail is a historical relic, and overnight delivery is a thing of the past. But now even electronic delivery via FTP has security hassles that slow the delivery process. Any bump in the road to software evaluation will result in sales delays, or the excuse for such.
So software appliances help ISVs deliver software faster and easier for quicker sales. Then what’s the catch? Well, when software can be so easily distributed and accessed, why should it reside on a server at the user’s site? And then, if a user doesn’t “own” the software, why should they pay for it when not being used? Now we are intelligently managing our software workload and perhaps accessing it as a service offering via the cloud. And that changes the standard pricing model.
And THAT’S where we as ISVs need to evolve our pricing model. It’s evolve or perish on this one. Go to Microsoft’s Web site – it’s all about “cloud computing”. Novell? Of course they understand this model. It used to be called “subscription”. It’s just now on steroids. And as customers become comfortable with the SaaS model, there will be no need to explain it; you just better have a price list that offers it. The challenge will be to price fairly enough so that the ISV makes a profit to stay in business. But it can be done. I’m open to hearing some of your ideas on how.
Posted
Aug 27 2010, 11:51 AM
by
PaulScripko