Software as a service

So, a recent article came out from Ray Lane of Kliener Perkins on "The Coming Service Revolution", and brought to mind a couple of thoughts.

As with many 'paradigm shifts', the service revolution is one that has been going on for some time and will continue to proceed, perhaps at an accelerated rate compared to historicals. Being of the mind that 'the cup is both half full and half empty', I tend to view these as additional modes of operation rather than replacement modes.

Let me explain what I mean. It is very rare that a particular way of doing business or selling things or system architecutre or you name it, is exclusively the way. What you generally find is many different models are required to fit into the many different models of doing business and living life. Sure, for the software-as-service market to grow faster, it will need to displace the software-as-license model as the market itself continues to grow. Additionally, new capabilities and ways of doing business will be born because of this new model--things we could only concieve of previously may now become feasible whether due to cost model changes, or simply the fact that the network is there and available in a 24/7 connected/dicsonnected, wired/wireless way. But does this fundamentally shift all software away from a license model?

My hypothesis is that there are some things that are better as a service and some things that are not so appropriate. This may be naive and old fashioned and you may claim that I'm not thinking far enough ahead and I'm missing the point. TBD.

It would also be interesting to find out how much software-as-service software and technology companies use. Those on the leading edge of pushing this modus operandi -- are they embracing it themselves? Are they using Salesforce.com -- are they using, for example, Sun's $1/cpu-hr and $1/GB-mo service? Are they chosing to use a platform like GrandCentral's to create business interactions?

My guess is yes, but for specific things and as a portion of overall spending. To what extent this ratio changes is indeed the bigger question.

I also like the model that Sun has for licensing -- $50/Employee/Year With Infinite Right-to-Use -- I can buy into that model as being more likely to replace 'one-time with 18% support fees and required upgrade cycles' model.

So, going forward, I see a healthy mix of the software-as-service and the rent-a-license models gradually replacing the one-time software license model. This will be augmented and supported by the use and adoption of open source licensing which will become the backbone and the infrastructure for many operations in the future. People will still pay for the service, support, expertise and differentiation that they require.

Kipp