Winning in a World with "Less Software"
SaaS and cloud computing are reshaping the nature of enterprise demand. Here's how software vendors can adapt and succeed.
By Pekka Huttunen, Accenture
Sep. 01, 2009
One of the high-tech industry's fastest growing product lines is netbook computers. This scaled down processor is proving to be popular for the rising number of consumers who would rather spend a few hundred dollars for a basic PC with Internet connectivity instead of spending more money for a feature-rich machine loaded with software and applications they don't want, need, or can't afford-especially during these tough economic times.
This trend toward "less software" is a fundamental industry shift which translates to a declining need for dedicated, on-premise applications. Software vendors must move rapidly to adopt a variety of strategies to succeed in the next era of enterprise computing.
The Move to "Less Software"
A new Accenture report titled "The Accenture Global Software Study: Key Industry Trends and Evolving Requirements for Achieving High Performance" identifies the traditional software licensing model as declining in use. This licensing model is being replaced by software as a service (SaaS). Use of SaaS translates to a declining need for dedicated, on-premise software as has been the traditional model.
One reason SaaS is acquiring converts is the model's relatively rapid implementation cycle. Another is rising Internet familiarity and comfort among people and companies, combined with a continual increase in global broadband availability. SaaS tends to be attractive for companies that have experienced failed implementations or painful, lengthy product roll-outs.
Such companies may also be more receptive to hybrids (combining "traditional" software with SaaS) and to blended models that include license, maintenance and consulting. A vendor is considered to offer a hybrid SaaS model when it makes on-premise, hosted and SaaS delivery options available to the same customer segment, while promising that customers can seamlessly move between those platforms.
Another rapidly growing on-demand concept is cloud computing. And like SaaS, cloud computing is forcing companies to rethink how they provide software to clients. Three subsets of cloud computing offer some practical parameters:
Worldwide demand is further influenced by the fact that Web 2.0 is reaching the mainstream. Web. 2.0 is all about new strategies and perspectives, leveraging the Internet to enhance creativity, stimulate communications, encourage information sharing and promote collaboration. The increasing number of Web. 2.0 applications have coincided with the emergence of software vulnerabilities.
This trend toward "less software" is a fundamental industry shift which translates to a declining need for dedicated, on-premise applications. Software vendors must move rapidly to adopt a variety of strategies to succeed in the next era of enterprise computing.
The Move to "Less Software"
A new Accenture report titled "The Accenture Global Software Study: Key Industry Trends and Evolving Requirements for Achieving High Performance" identifies the traditional software licensing model as declining in use. This licensing model is being replaced by software as a service (SaaS). Use of SaaS translates to a declining need for dedicated, on-premise software as has been the traditional model.
One reason SaaS is acquiring converts is the model's relatively rapid implementation cycle. Another is rising Internet familiarity and comfort among people and companies, combined with a continual increase in global broadband availability. SaaS tends to be attractive for companies that have experienced failed implementations or painful, lengthy product roll-outs.
Such companies may also be more receptive to hybrids (combining "traditional" software with SaaS) and to blended models that include license, maintenance and consulting. A vendor is considered to offer a hybrid SaaS model when it makes on-premise, hosted and SaaS delivery options available to the same customer segment, while promising that customers can seamlessly move between those platforms.
Another rapidly growing on-demand concept is cloud computing. And like SaaS, cloud computing is forcing companies to rethink how they provide software to clients. Three subsets of cloud computing offer some practical parameters:
- Utility computing implies on-demand access to information and capabilities residing on storage and virtual servers and is currently limited to supplemental, non-mission-critical needs. Specific utility computing applications help create virtual data centers from commodity servers and one day may replace parts of a company's data center.
- Web services in the cloud refer to functionality reached over the Internet, rather than full-blown applications delivered to the user. These range from providers offering discrete business services, to the more broad range of application programming interfaces.
- Platform as a service refers to delivery of development environments as a service. Users build their own applications that run on the provider's infra¬structure delivered via the Internet. These services are constrained by the vendor's design and capabilities. As a result, users get predictability and pre-integration but not necessarily complete freedom.
Worldwide demand is further influenced by the fact that Web 2.0 is reaching the mainstream. Web. 2.0 is all about new strategies and perspectives, leveraging the Internet to enhance creativity, stimulate communications, encourage information sharing and promote collaboration. The increasing number of Web. 2.0 applications have coincided with the emergence of software vulnerabilities.
