The Eternal Value of Subscription-based Services
October 23, 2009 by Irad CarmiHere’s a post from our first guest blogger, my partner, co-founder and friend, TOA’s CTO – Irad Carmi:
I read a NY Times article last week about the value of the subscription model, which led me to the following thoughts:
Almost every item we acquire has an end-of-life built into it. It may be a camera, a laptop, a shirt, a car. Buyers and sellers know that the product will expire/break and will have to be replaced at full price. Software is especially prone to this built-in obsolescence. You can either upgrade it for a lot of money, or one day you won’t be able to use it. Even if you upgrade the software you can reach a point where you can no longer use it. Many software companies have been upgrading their products for decades, even though the hardware it runs on is no longer even being manufactured.
Imagine how nice it would be to have a subscription for a laptop or a car. Every month you get a brand new model. It never breaks, never gets outdated, and constantly improves.
As you figured out by now, that’s exactly what TOA and other SaaS vendors offer. And prior to this wave this was an unheard of approach in the enterprise software world. A continuously self-renewing solution, one which always runs on the latest hardware, using the latest technology, and gets better every day. The value of this ongoing incremental improvement is huge, and includes not only the price of upgrades and new hardware, but also savings on IT and training personnel, painless Change Management, and significant competitive advantage.
Gartner says that in two short years, by 2012, 30% of all customer service and support applications will be delivered on-demand. SaaS has proven itself as a discontinuous innovation. It’s been transforming the world of software for nearly a decade. And those companies who don’t recognize it risk becoming one of the “Have-Nots.”
