There has been a significant change in the deployment of technology in recent years, and this is set to continue in the years ahead.
With the development of the internet, but more importantly the infrastructure to support it, if an application is now not fully web enabled then it is not in the game. The times of locally deployed systems are behind us, and with ADSL broadband (or higher) connectivity rates installed as standard the crunching and squeaking of modem connections or “thin client” imitations are gone. Central data access is taken for granted, and now it is not if we can get connected, but how and by which most efficient means.
This technological advance has also dramatically changed the way we do business in the software industry. Software products are more commonly deployed as a service, with rented or phased payment plans alleviating the need for high initial capital expenditure. We are also seeing changes in what we buy and how we use this technology.
In the past we purchased “modules” or functionality if we thought we required it, licensed it but often never used all these business tools. How often have we heard “we are not getting the full use out of our system”.
In these changing times we now only need to purchase or rent the system functionality required, for the parts of our business where we need it, and readily switch it on or off as our business demands dictate, sometimes for limited periods of time.
Licenses are becoming transferable, so system use and payments reflect what is happening within the business and system charges flex accordingly.
So what is the catch?
Rentals and Software as Service are good for the purchaser and give the supplier some security from the recurring revenues, but it is not all good news.
Delayed revenues from upfront investments restrict innovation, development and new entry to market for new providers or product offerings. This purchase model does imply lengthier payback periods for development investments, with protracted growth curves which with the need to regularly update technology product could mean little return from the development investment. This implies that the funding models of software development must change, or there is a significant reduction (or spread) in the initial investments.
Those mature companies which have already provided for the investment and which have successfully transferred the bridge between capital to rental or SAAS models are much better positioned to respond to this changing need and should be around to see the investments through.
My opinion – ensure that the company you purchase from has covered its investment costs (or can clearly demonstrate it can) and that it will be around to honour your rental and ongoing business needs for the years ahead.
FDHospitality 