Several software trends are changing the way the software business is run... As customers move to subscription-based services rather than perpetual software licenses, these software industry trends are having a significant impact on software vendors.
The change is not only to the business model of the software company (product portfolio, pricing, etc), but impacts almost every aspect of doing business, including development, marketing, sales and support. To compete in this new marketplace, software vendors must understand software technology trends and their implications and factor them into their business planning.
Here is a quick view of the business impact of the move from traditional software to software subscriptions and services, based on the summary by M.R. Rangaswami, publisher of Sandhill.com, in the webinar "The Death of the Enterprise Software Buying Cycle":
|Business Function||Old Model||New Model|
|Business Model:||Perpetual License||Subscriptions / On-Demand Service / Open Source|
|Product Planning:||Bug-fixes & customer feature requests||Strategic plan based on marketplace changes & customer needs|
|Architecture:||Features & functionality first, standards secondary||Standards (web services, SOA) critical, features secondary (but still important)|
|Development Cycle:||Long between versions with small point updates||Frequent small updates, component-based, transparent to user|
|Marketing:||Print (brochures, etc), conferences||Online, email|
|Sales Model:||Direct sales reps, onsite demos, lengthy POCs||Telemarketing, free trials, channel sales|
|Sales Cycle:||6-12 months or more||< 3 months|
|Purchase Decision:||IT main purchase influencer (with LOB)||LOB main purchase influencer (with IT)|
|Implementation:||Months to years (requirements gathering, POC, pilot, full deployment)||1-3 months max|
|Customer Support:||Phone, often with long wait||Online, quick response with FAQs / chat|
If business software vendors are to survive, it is critical for them to internalize and understand the impact of these current software trends. Not all may be relevant to your particular business and niche... but doing (or redoing) a solid business plan is necessary to ensure your survival and to realize the opportunity for business growth in the new software services market.