Unboxed: Why You Should Rethink Your Software
The age of the standalone software package that you buy in a store is fading away, fast. Software as a Service (SaaS) is a useful, proven business model that takes more than a few cues from association membership models, but it could put you on the hook for a lot of extra costs if you're not careful about allocating resources.
The days of expensive, once-in-a-blue-moon software upgrades aren’t dead yet, but things certainly aren’t what they used to be.
This became clearer than ever when Adobe announced last week it was taking a cue from the startup world’s business playbook and tying its fortunes entirely to its Creative Cloud platform.
For Adobe, whose products are perhaps as close to a requirement for design-oriented companies as anything Microsoft makes, the move to a monthly subscription model with perks—because you have to have perks to get people to upgrade, right?—is a reflection of the evolving needs of business users and a nod to users who like having the latest and greatest at all times.
But wait a second—doesn’t this business model sound familiar? If you’re an association executive, that’s because it’s probably a lot like your own. Software is starting to become a heckuva lot more like association membership: fewer one-time costs, more fixed ones.
So what does that mean for your IT department, anyway?
New, but Not So New
Adobe’s move is a shake-up for businesses at large that will have to adapt to the $69.99 per month seat charges, but it’s certainly not unprecedented. If anything, Adobe is catching up to its slightly younger peers.
In the past decade, newer companies have latched onto this model, known in industry parlance as “Software as a Service” (SaaS), pretty quickly. Younger companies—such as HootSuite, Salesforce, Dropbox, and Yammer—treat their web-based business apps less as one-time-cost items and more as constantly evolving products that hold sustainable value for companies.
This segment of the industry is growing quickly: Last year, IT research and advisory firm Gartner estimated that SaaS revenue could reach $22.1 billion by 2015. Between the rise of cloud computing and the increasing availability of broadband, it was only a matter of time before traditional powerhouses like Adobe and Microsoft followed suit. (Microsoft launched Office with a yearly subscription platform earlier this year but has no plans to drop the shrink-wrap.)
The existence of those web apps should help grease the skids for Adobe. While the company’s basic approach is the same, there are some differences. Adobe is charging a lot for its product, keeping in mind its market dominance; it still requires a sizable desktop presence and isn’t entirely reliant on the cloud; and it’s bundling a lot of stuff into a single package.
(Speaking of bundling: While Adobe is offering its apps separately, they’re clearly priced to discourage buying separate apps. My colleague Joe Rominiecki made a pretty good point on this whole bundling thing in regard to his cable subscription a couple of weeks ago.)
The problems that could arise
So, should your association follow along? With a model change this drastic, it’s understandable that there might be hesitation, but Adobe has made efforts to burnish Creative Cloud’s image since it launched a year ago.
For one thing, it came up with a pricing model reasonable for different types of users. College students, for example, might have been forced to resort to piracy rather than pay hundreds of dollars for the software package. So they pay just $19.99 each month. And while enterprises will end up paying more, they’ll also get better service from Adobe, including a streamlined approach to software management.
And it’s worth noting Adobe’s service requires users to check in online only once a month. So no need to worry about things breaking if the internet’s down. Such trouble recently befell gaming company Electronic Arts when its servers went down during the launch of the latest iteration of its popular SimCity; it was a major problem because the game requires internet access.
Really, the biggest problem with this model might be less technical and more budgetary. Simply, the more SaaS products you use, the more partners you have to work with—and the more bills you have to pay and manage. It requires a mindset change: You’re on the hook for paying for those apps every single month. You’re locked in, and that cost isn’t going away unless you find a better option. The problem increasingly becomes death by a thousand cuts.
In the context of association membership, people or organizations often pay to be members of a couple of associations relevant to their interests. But it’s typical for computer users to utilize dozens of apps—web-based or otherwise—in a given month.
To put it another way, be smart about what you’re using, what you’re testing, and who needs what. If you design things in-house, Creative Cloud’s benefits may make using it a no-brainer. But you need to think really hard about who on your staff needs what and how things work together.
If you’re not being thoughtful about resource allocation, SaaS could become “Software as a Disservice.” That would be SaaD.