Gartner estimates that by 2020, 80% of SaaS vendors will adopt a subscription only model. Most say that OPEX (pay-as-you-go OPerating EXpenditure) is the logical replacement for CAPEX (pay up-front CAPital EXpenditure). Whatever the case vendors are embracing the recurring revenue model much faster than expected.
Vendors say this change is driven by two things. First, by the users' demand for flexibility and second that tax and depreciation models seem to confirm that CAPEX is out.
iTWire asked Steve Singer, ANZ Country Manager, for big data specialist Talend for comments about the changing business models.
Subscription Services: bringing innovation as close to the market as possible
Let's forget for a moment how software is billed and look at another essential aspect: The ability to provide IT managers with frequent releases that encapsulate the latest technology and innovation to meet changing customer demands, as well as an easy to manage and scalable solution.
Cloud-based SaaS provides the ability to have quick access to the compute resources and apps you need when you need them to help deliver qualitative results faster, cheaper and with higher quality in order to create a competitive advantage.
While a perpetual license model also allows for periodic software updates, the rhythm of these updates and the frequency at which they are available to users cannot be compared with the ongoing agility and innovation offered by providers of subscription services.
This is not related to how their software is marketed, but rather to the vendor's ability to establish a continuous cycle of innovation for its products, the rewards of which transfer to their customers.
Big data and cloud: continuous innovation is the model
The continued growth in the use of big data and cloud technologies is in and of itself, a compelling proposition for continuous innovation.
The speed at which these technologies become obsolete requires users to adapt at an unprecedented rate. Consider how the platforms adopted by customers today can become obsolete in as little as 12-18 months. In Talend’s big data world Spark replaced MapReduce in record time and Spark 2.0 is a revolution compared to Spark 1.6.
It is essential for integration, processing, and operating software vendors responsible for these massive volumes of data to get as close to the market as possible, which means complying with key standards such as Hadoop, Spark, and Apache BEAM.
Not to mention they need to align themselves with the open source communities defining them. In practical terms, a company needs to anticipate the product roadmap needed to align with these innovative technologies and keep pace with customer demands.
Open source technologies — which are backed by the collaboration of a technically adept developer community and various partners — are particularly well suited to a continuous innovation model.
Additionally, subscription services are a logical way to embrace and foster a continuous innovation model. Previously dominant or legacy software models, marked by "proprietary" software solutions and perpetual licensing, took 18 to 24 months to deliver new features.
If you want your business to keep pace with the advances in machine learning, IoT, real-time data streaming analysis capabilities, depending on a model that consists of delivering new versions every 18 months is simply not viable for businesses.
To support the emergence of new data uses
Modern solutions for big data and cloud integration must be at the frontline of technology innovation. Not only to address customers various and rapidly evolving challenges - including customer intimacy, business sustainability, agility, and economies of scale - but also encourage the emergence of new data uses like streaming, real-time insights, and self-service in order to gain a competitive advantage.
In the past, a technology feature could last for years without risk of becoming obsolete (e.g. SQL). Today, the speed at which big data and cloud platforms become obsolete is mind blowing.
Competition is fierce between companies using digital transformation as a strategic lever for performance and competitiveness.
The result: Users of these technologies need the ability to easily adapt from one standard to another practically overnight. That’s why it’s so vital to select a vendor that is in line with the times, at the forefront of market innovations so your business can continuously move at the speed of ‘what’s next.’