I had the opportunity to sit in on a session on "Software as a Service" at the C3 (Corporate & Channel Computing) conference going on this week in New York City. The panel consisted of IBM SaaS guru Dave Mitchell, JamCracker's Todd Johnson, and Intacct's Robert Jurkowski.
Some interesting points from the discussion about the SaaS subscription model:
- The SaaS model that evolved a few years ago -- application service providers -- did not take off because companies still had to license entire application packages before handing it over to the ASP to run. SaaS is delivered as a componentized, subscription model.
- Compliance requirements are driving SaaS engagements. Offloading the complexity and reporting requirements to a SaaS vendor alleviates some of the pain of regulations such as Sarbanes-Oxley.
- SaaS just isn't a small to medium-size business play. Many subscribers to SaaS applications are business users making end-runs around IT.
- SMBs aren't naturally attracted to SaaS. They're more likely to rely on the advice of a trusted advisor to steer them this way.
These SaaS proponents predicted that all software will eventually be delivered under the SaaS model. "Since 2000, a lot of companies have purchased software that ended up as shelfware," said Jurkowski.
There was also some discussion about how the SaaS model will be delivered -- whether via individual software vendors themselves, or through SaaS aggregators.
The subscription model seems highly logical, the wave of the future, and the panelists here made a very convincing case of it. But vendors I'm spoken to so far that offer subscription models say that the main interest thus far is as a way for end users to test the software before eventually plunking down the money for a full-fledged license.
Perhaps there's still an innate fear of reliquinshing control of valuable corporate assets -- in this case, applications, and to some extent, data -- to a third party.