SaaSonomics - the new world of IT economics

The Old World

Software publishing used to be a small team in a garage creating a new killer tool or widget and then scaling out the distribution model to monetize it.

Sales models evolved from direct to channel sales, and Borland successfully introduced an innovative Mail Order model.

But with the steady wheel of progress, software vendors have come and gone as mega vendors such as Microsoft, Oracle, and SAP have expanded their boundaries.

The New World

In the late 90's we had a brief foray with ASPs (App Service Provider). But these were essentially an idea before their time.

After the dot com bust and intense cost cutting, ASPs have made a come back with improvements that we now call SaaS (Software as a Service).

SaaS no longer means take existing software and running it in a shared data center.SaaS providers have established a new model delivering "good enough services" that are fast and reliable ... and cheap.


I don't know if any of us were prepared for the changes that SaaS vendors are exposing vendors. But SaaS is also creating challenges for IT procurement. It's not uncommon to see the business do an end around their own IT group, and and subscribe to SaaS services directly.

What does it all mean?

For Software publishers 

Change from a being a means to an end (getting high cost software to IT customers) - to an end unto itself (providing value directly to subscription paying business customers). Quickly.

Imperative - develop simple value proposition for end users with a specific business problem and provide easy access to basic features with frequent updates.

For Business users

Change from dependency on corporate IT (to guide project implementation) to self sufficiency in identifying business opportunities (and evaluating SaaS solutions).

Imperative - identify business analysts who can recognize business problems and evaluate solutions.

Who dares wins (for IT)

Success comes to those who dare ... and Act!

Change from Old IT (manager of apps and infrastructure) to New IT (broker of services that support the business).

Imperative - initiate IT transformation project for new services. Mandate a SaaS first policy for new services when possible and only fall back to public / private cloud delivery when business needs dictate.

What's your strategy?

Are you implementing a transformative approach? What were the drivers?

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