Over the next few years we’re going to see more and more businesses move to software subscriptions rather and licensing/purchasing software applications.
This change is very much like the changes that took place when ATMs were first deployed or when the first online shopping sites appeared. There are a lot of naysayer’s who don’t believe that anyone will want to put their business processes in the hands of someone outside their company, but the advantages of subscriptions will outweigh the disadvantages soon.
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Advantages
In a software subscription environment the focus of the company stays on the core business and not on the technology that enables the business. When you have someone else worrying about the nuances of accounts receivable processing you can devote more resources to generating the business that creates those accounts.
Many companies already do this when they outsource their payroll processing. They don’t worry about whether the tax tables are up-to-date, they just worry about whether their employees are productive.
In this way, the time and effort involved in maintaining and updating generic business applications software goes away. Someone who is far more knowledgeable about the subtleties of a particular business application will update the software without your in-house staff doing all the research to determine whether this is a good update or not.
You don’t have to worry about whether you need to spend money on a new server because the old one ran out of gas; the software subscription vendor takes care of that as a part of the subscription.
You don’t have to worry about running the backup everyday, because your provider will do that for you. From a business continuity perspective you’re in much better shape since you can run the subscription business process from just about any computer.
So, if a disaster strikes, your normal business processes can be up and running again as fast as you can run down to the local Best Buy and get a new machine.
You can also count on what it will cost to run that part of your business. You know exactly how much it costs you to run your general ledger or accounts payable or CRM system. Under a licensed model, there are a lot of hidden costs you don’t know about or track so you really don’t know — other than the cost of the software — what it costs you to run those systems.
Disadvantages
Today, the software subscription offerings are still in their infancy so they may not be as flexible as they will be in the future. They aren’t fully “business hardened” yet so there are going to be problems you don’t see in a licensed software package. The upside is the provider’s business is dependent on a stable service offering and they will throw every resource they have at resolving the problem quickly.
There is a possibility proprietary information could be leaked by someone inside the subscription provider’s company. But that could happen from inside your company as well.