How the Subscription Economy will Change Your Business Applications

Much of the discussion of Software as a Service has focused on technical details like multi-tenancy or on the way SaaS allows end-users to bypass their IT departments. What has been ignored in my view are the second order effects of both the technology infrastructure of SaaS and the business model, which has become known as the Subscription Economy. These second order effects are changing the requirements for business software in a variety of ways that contain important lessons for CIOs and CTOs.
 
What is a Second Order Effect of SaaS?

To make it clear what I’m talking about, here is an example of the most obvious second order effect of the multi-tenant model: SaaS software is much easier to configure than on-premise single tenant applications. Remember in the SaaS model, there is only one version of the software that everyone uses. The vendor takes responsibility for upgrading everyone from one version to the next. The direct relationship between the vendor and the customer means that any problems with configuration directly show up as higher support costs, not as higher revenue for implementation partners. As a result, SaaS vendors have to focus a huge amount of attention on making the software easy to configure and customize. In the on-premise model, channel partners who help sell the software may be hurt by better configurability, which could lead to lower service revenue.

Salesforce.com in my opinion sets the highest standard. Its configuration system allows both simple changes without too much fuss, but also allows extensive customization. (See “Saleforce.com’s Secret Sauce” for a discussion of multi-tenancy. Key quote: “The biggest value of multi-tenancy is not the benefit that Salesforce points out but the fact that it forced Salesforce into doing a better job of creating a metadata-driven application.”)

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>>> Ver artículo original completo en: http://www.forbes.com/

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