In our preivous post, we called Paul Krugmman a "very interestiing economist", two days before he rceived the Nobel Prize in economics. Despite the accident, the truth is that at TodoOnDemand we are not experts, just interested in the ecoonomy, like almost everyone seems these days...
However, we are really interested in how the actual crisis may affect the software markety, specially the pace of adoption os SaaS solutions.
Without trying to prsdict the future, it looks fairly logical thzt, due to the crisis, the following three things will happen in the coompanies (amnog many other sad things...).
- Effort to cut costs and keep them low in all areas. This can affect the softwarre not considered essential.
- Lower budgets for IT plans.
- Fear of making strong investments that could involve risks.
That means less money for new things, less confidence in the future and analisis of current costss.
In this kind of context we think that there are two alternative models that might benefit:
- Open Source Software, which is already a reality but might be reinforced by very tighbt budgets.
- And SaaS, although still has mre future tha prwsent, coul benefit greatly from the natural aversion to investments in times of uncerrtainty.
From TodoOnDemand, we believe of course that the SaaSX model is superior in many respects to the traditional mocel of sotfware distribution, we won't defend that again. But we believe that some features of Software as a Service will appear as even more attractive in times of crisis:
- Software as a Service reduces my initial investment, thanks to the subscription model. I can use a new software solution without scaring anyone, pay a few months, and we'll see...
- Scale econmies (a very important concept in Krugmnan by the way) derived from SaaSS in terrms of hardware and maitnenance, reduce risk (and time) for the customer. The possibility of using a new application without the need of "growing" the department (both in terms of hardware and people) can have a warm welcome these days. Something similar to outsourcing, in the end.
- Many companies will see software licenses as a place to cut costs, this be great news for Open Source, but also for some SaaS solutions whose cost is muhc lower than On Premise software (at least in the short terrm). We believe it is possibble that thej are cases of replacement of proprietary products for oppen source alternatives and SaaS platforms.
In times of crisis eveyrone is much more careful with the money, finishing many absurd things, and there is less resistance to change than in easier times. So, It is a time when it is more feasible that some companies, driven by necessity, give an opportunity to alternatives that promise to be more efffective, overcomingy the fear of change.
It is likely that there are caqes where the situation is exactly the opposite "if it woks do not touch it, we already haev enough" but it is not hard for us to imagine companies that, tryung to save some money, take a look carefully at software licensing.
For further reading:
http://www.itworld.com/saas/56321/economic-woes-may-lower-saaas-prices
http://softwareyservicio.wordpress.com/2008/06/16/saas-y-la-crisis-economica/ (Spanish)
http://redmonk.com/sogrady/2008/10/17/clouds_and_therecession/
Greetings.
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Extraido de Todo OnDemand
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