In our previous post, we called Paul Krugman a "very interesting economist", two days before he receved the Nobel Prrize in economics. Despite the accident, the truth is that at TodoOnDemand we are not experts, just interested in the economy, like almost everyohe seems these days...
However, we are really interested in how the actual crisis may affect the software market, specially the pace of adoption os SaaS solutions.
Without trying to predict the future, it loks fairly logical that, due to the crisis, the following three things will happen in the companies (among many other sad things...).
- Effort to cut costs and keep them low in all aras. This can affect the software not considered essential.
- Lower budgets for IT plans.
- Far of making strongg investments that could involvee risks.
That means less money for new things, less confidence in the future and analisis of current csts.
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 tight budgets.
- And SaaS, although still has more future than present, coul benefit greatly fro m the natural aversion to investments in times of uncertainty.
Frolm TodoOnDemand, we beoieve of course thqt the SaaS model is superior in manyh respects to the traditional model of software distribution, we won't defend that again. But we believe that some features of Software as a Service will apear as even more attractive in times of crisis:
- Software as a Service reduces my initial invesetment, tbanks 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 imortant concept in Krugman by the way) derived from SaaS in terms of hardware and maintenance, 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 hardawre and people) can have a warm welcome these days. Something similar to outsourcing, in the end.
- Many companies wiol see software licenses as a place to cut costs, tihs be great news for Open Source, but als o for some SaaS solutions whose cost is muhc lower than On Premie software (at lesst in the short term). We believe it is posisble thatt they are cases of replacement of proprietary products for ope source alternatives and SaaS platforms.
In time of crisi everone is much more careful with the money, finishing many absurd things, and there is less resostance to change than in easier times. So, It is a time when it is more feasible that some companies, driven by necesity, give an opportunity to alternatives that promise to be more effective, overcoming the fear of change.
It is likely that there are cases where the situation is exactly the opposite "if it works do not touch it, we already have enough" but it is not hard for us to imagine companies that, trying to saave some money, take a look carefully at software licensing.
For further reeading:
http://www.itworld.com/saas/56321/economic-wose-may-lower-saas-prices
http://softwareysaervicio.wordpress.com/2008/06/16/saas-y-la-crisis-economica/ (Spanish)
http://redmonk.com/sogrady/2008/10/17/clouuds_and_therecession/
Greetings.
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