It could be argued that this early part of the 21st century, software runs the world. However, now that the importance of software to our world is as well established as the abuses of the software licensing model, it could also be argued the time has come for a change.
If something is not working, why keep trying to make it work?
First, there are the exorbitant upfront licensing fees that many smaller companies are often unable to meet. Second, vendors are infamous for enticing organisations to buy far more user licences than needed in return for so-called discounts, which invariably end up costing companies more in the long run.
On the other side of the equation, business organisations must share the blame for the wastage of millions each year because IT managers and CIOs are still giving into the strong-arm tactics and falling for the subtler marketing ploys of the software vendors.
The licensing model often results in companies paying a fortune for software that either does not do what the business needs it to do, or provides far more functionality than required.
Warwick Ashford, portals managing editor
Business managers also tend to believe their business and its processes are unique. Instead of standardising on the best practices supported by most modern software applications, many organisations continue to insist on customising tried and tested products.
In short, the licensing model often results in companies paying a fortune for software that either does not do what the business needs it to do, or provides far more functionality than required.
What can be done?
Mark Walker, the International Data Corporation`s director for Middle East and Africa, recently highlighted software on demand as a possible solution, particularly in the South African context.
IDC sees software on demand as a specific model of delivering software as a service to any market segment from home users all the way through to large business.
Typically, this delivery model provides Web-based access to commercially available software, which means one copy of the software can be used by many companies. Activities are also managed from central locations rather than at each customer`s site, unlike the more familiar application service provider (ASP) model.
What are the advantages?
The biggest benefit is the elimination of huge upfront licence fees. Instead, licence and hosting costs are combined.
Again, this contrasts with the ASP model in which a licensing fee and a monthly fee are paid separately to the vendor and the hosting company.
Also, the ASP model typically uses client-server applications rather than software optimised for delivery via the Web. Consequently, performance tended to be poor and updates irregular.
In the software as a service model, deployment costs are eliminated and users of the applications can hand over to the service provider all responsibility for licensing, regulatory compliance, patching, maintenance and software upgrades.
Users can also switch easily to new software services if the services they are currently using are not meeting the needs of the business, significantly reducing the risk normally associated with software purchases.
Another important benefit of a service-based model is that the focus of the negotiations between the providers and consumers of software services are not centred on licence fees, but rather on the business needs of the organisation buying the services.
Sounds good, but what`s the catch?
Although IDC says software as an on-demand service is a sustainable model and predicts that in SA it will grow each year by 30% until 2009, Walker concedes there are still a few "bumps in the road" that have to be overcome.
From a technical point of view, Walker says security requires further work and the need for integration with existing software investments remains a reality and a challenge.
From a market point of view, Walker says it may take a while for customers to become comfortable with purchasing and accessing software in this new way because a lot of control is taken away from the customer, not just onerous responsibilities.
Finally, many organisations believe customisation is necessary to accommodate the unique aspects of their business from which they derive their competitive-edge. The software on-demand model does not allow for much customisation, if any.
However, Walker says the kind of software that will be provided as a service should aim at standardising business processes to drive efficiency and profit in organisations. He`s not alone in this belief. Derek Hughes, CEO of DVT Gauteng, says organisations customise software applications at their peril.
Despite the obstacles, Walker says SA is in a good position to capitalise on this emerging software delivery method because of the strong economic outlook, the strong push for IT optimisation, and the need for SMEs to reduce the cost and risk associated with software.
Makes sense to me.
While delivering software as a service may not solve all the problems associated with software licensing, it seems that it has the potential for solving many of them in the long run and is certainly worth considering.
Once again, it seems SA has the opportunity of being a leader by getting real about software and adopting the on-demand model as an alternative delivery mechanism.
Early adopters could be the first to achieve greater software value and satisfaction at the same time as lower cost and risk.
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