I don’t usually like to comment on areas directly related to my day job and I am in no way an impartial observer, but this is already an important week for Software as a Service. I imagine it as a tectonic movement that may seem small and inconsequential at first glance, but signals a new emerging landscape of IT. In the last two days both SAP and Adobe announced that they will be moving away from “shrink-wrapped software” to software as a service models.
Adobe is particularly hardcore – killing perpetual licensing for future products altogether. At Adobe’s MAX conference they announced the next version of Creative Suite Cloud, and put the nail in the coffin of the Mighty Suite with a Mighty Price tag:
“In order to accelerate the rate at which we deliver new features and services, and to ensure that we do so with the highest level of quality, we are focusing all of our efforts on Creative Cloud.”
Is $50 dollars a month for a superset of features, a faster update cycle better than $2500 for a perpetual license that is out of date after 2 years? Hell yes – It is no competition. This is such a clear value proposition it almost makes the counter-proposition ridiculous. At $50, I wouldn’t even need a receipt to attach to my expense report. A $2500 software asset purchase has to run the gauntlet of approvers and exceptions and business cases and even then – it would take 5 years to be cost neutral with the subscription offering. That is assuming no upgrades in that time (a stupid assumption), assuming no other competing products emerge (a stupid assumption) and that I still have a use for the software after all that time (a stupid assumption trifecta!).
Now, there are probably all sorts of large customer discounts, special promo offers and other ways of getting perpetual versions of Creative Suite that are not so pricey, and maybe there are people that are already invested in the existing software and need to squeeze the value out of it without looking like schmucks to their management (but even then, the existing customer discount for the first year may be enticing).
Separately, the grey-suited battleship of the enterprise software world, SAP announced that it would be moving its offerings to the cloud.
“At some point in the future, complex implementations should go away. All of our products are moving to HANA.”
http://bits.blogs.nytimes.com/2013/05/07/sap-takes-it-all-to-the-cloud/
Complex SAP implementations are not just the perils of the job for a SAP consultant – IT IS THE JOB! There is a cottage industry around the correct care and feeding of a SAP implementation. Granted, the SAP approach is much more nuanced – offering choice and flexibility for IT departments that have no immediate need to change, but if HANA does what it says on the proverbial box, it is signs of a big change in the industry. The amount of capital expenditure this will free up in IT is going to allow businesses to focus on innovating with IT, rather than just keeping the lights on.
The NYT article is also memorable for one of the best executive smack-talk lines in history:
“We have single customers running projects that are bigger than the entire Salesforce.com cloud”
Oh, Snap!
Microsoft Office also on this path – with a quarter of enterprises and consumers already adopting Office 365. Clint Patterson sums up the trend and the Microsoft point of view very succinctly :
“Within a decade, we think everyone will choose to subscribe because the benefits are undeniable.”
It is hard to predict whether Microsoft Office, Adobe Creative apps or SAP business systems will adopt the new model faster – the target audiences are different and have a different tolerance for change. I think of every organization and every IT pro as being on our own journey of discovery with cloud computing and subscription offerings like this. There are plenty of challenges to overcome and different risk postures, regulations and business factors that will influence how, why and when this model will be prevalent. There will be ways to purchase perpetual software licenses for some time yet (even from Adobe), but the trend is crystal clear.
Superstratum 