Do you remember when you could go into a supermarket and someone would scan your items for you at a checkout? If you are a little older still you might remember the days of the shop keeper actually speaking to you and getting products off the shelf for you. They probably even knew your name.
Similarly if you have been around software for a while you will remember the days when SaaS stood for Software as a Service. Today this seems to have been reduced to nothing more than Software as a Subscription.
In the same way that the in-store retail model has been fractured by the eradication of ‘service’ so too has the world of software ownership. Sadly, in both instances, these changes have been driven by a short term myopic obsession with profit. The naive belief that what matters most is the suppliers business model rather than what matters to customers.
Let me begin by explaining the difference between “Service” and “Subscription” (I know this should be self evident, but clearly these days it isn’t). Before considering why it matters and the opportunity at hand.
The crux of the matter is what does your customer pay for? A great example of a software niche that gets this right is Payroll. Here, if I buy a SaaS solution I am paying for the number of payslips your ‘machine’ produces for me. Frankly I don’t care if you use software or Leprechauns riding Unicorns to produce them, all I am interested in is entering hours and staff details and getting payslips back. For the benefit of youngsters this is what was called “Software as a Service”.
But driven by a complete lack of customer insight, and the dream of showing investors ‘Annually Recurring Revenue’ in order to obtain fanciful valuation multiples, some idiot came up with the idea of renting software to users that really should be just sold to them. Example; I have to pay a monthly subscription for my accounting software. WHY??? I would rather pay a one time fee and own that particular version. In the unlikely event that the software house built a new version with features that matter to me, then I can pay to upgrade.
Sitting here I can almost feel the tired objections that are often replayed by the new breed of “SaaS” software business, so let me quickly burst those balloons:
- Support: If I want to buy support then that should be dealt with separately and for that I am happy to pay an annual fee. Subject to you actually delivering any meaningful support service.
- Cloud: Stop trying to blur Saas with IaaS. Just supply the software and let me decide where I want to run it. If I want to virtualise my environment and move to a Private Cloud then that is between me and my Cloud Provider. Absolutely nothing to do with you as a humble software application provider.
This vision of sanity of course does not suit the Software house. It doesn’t suit the Investors. It doesn’t even really work for the Developer employed by the Software house. The only person it suits is the customer.
So here is the thing. At some point an innovative Software house will disrupt the market with an innovative break through commercial model; the idea of a customer buying a perpetual licence to a fixed version of a product or else charging for actual SERVICE. Just like the old days!
Who knows one day someone will open a physical shop with a real shop keeper who helps me in the store. Radical stuff.
