Decline of packaged software doesn't make the hosted model perfect
It was interesting to see Microsoft take a back to basics approach to software sales by appointing ‘road warriors’, who will wear out shoe leather to promote sales of Office 2010.
But it would be equally interesting to be a fly on the wall at one of these customer meetings to find out if users will be as ‘old fashioned’ in their approach to the buying side of the equation. Will they be asking about the free, online Web Apps versions of programmes within the Office suite or are they content to use packaged or traditionally-licensed programmes for now?
Windows Live will allow consumers to access Web Apps, while Office-licensed enterprises use Web Apps with hosted data.
With the growing momentum of software as a service, there’s a popular sentiment that the decline of boxed software among consumers, and on-premise software among businesses, is inexorable.
Microsoft is of course not the only vendor confronted with this issue, especially amid competition from Google. It extends to enterprise applications players such as SAP and Oracle with Salesforce.com in the mix, and any manufacturer of consumer security, accounting and other packages.
Software delivered via the cloud remains relatively nascent here. IDC says locally the penetration of cloud services is 6.8 percent, while in Australia the penetration has reached 17.9 percent. Globally the delivery model is forecast to comprise nine percent of IT revenues by 2012, but with a high growth rate also predicted.
Local cloud specialist OneNet recently told Reseller News that of a sample of 350 partners it canvassed, about 50 percent were still taking a “wait and see” approach to the cloud.
The benefits, perceived or real, of web-based software delivery are as well documented as the factors consumers and business see as contributing to a slowdown in traditionally-delivered software, boxed or licensed.
Providers of software as a service tempt potential customers with the prospect of simple upgrade processes, along with the ability for smaller firms to get access to specially-developed features their companies need, especially if they’re an early adopter of a recently-launched managed software service. Saas providers also point to a reduction in capital development spend and predictable IT costs.
For partners, annuity revenue is the biggest benefit.
The sticks that accompany these carrots at end user level are enterprises’ concerns over security when data is hosted. This of course increases the attractiveness of either on-premise software or a private cloud.
Downsides for resellers are, depending on the type of software being delivered, the ability to solve the billing puzzle and administration associated with providing managed services.
Vendors scrambling to add the word cloud to their products and services, particularly in the virtualisation space, are only adding to consumer and business confusion over the technology.
Custom development is a key issue for small companies and one that must be considered in the debate over software as a service. It’s less likely in two cases – where a business is smaller and has fewer IT resources, and during tough economic times when budgets are tight. New Zealand is of course dominated by small firms and last year economic times were the hardest they have been in years.
Licensing complexity is a long-standing source of frustration for partners. The local online toolkit from software giant Microsoft about its licensing options looks complex in itself at first glance. It also makes evident the many issues confronting partners when they tackle the licensing puzzle; what size is the partner and customer organisation size; what software product(s) is/are being licensed; are PCs leased or owned?; which programme has the best benefits?; how can licences be transferred and price lists deciphered?
There is no guarantee that the problems, perceived or real, associated with traditionally-delivered software will disappear if any organisation or partners chooses the service route. This is why providers will need to continue to achieve demonstrable wins in terms of productivity and cost saving to gain widespread acceptance among resellers and users.
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