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In the past software was a product, in the future software
will be a service. You may even find that your company will provide software as
a service to your current customers or you may develop new customers of these
new services you don’t even yet provide. You will no doubt become a customer of
these services either corporately or as an individual, in fact you probably
already are.
As I said in my introductory article Microsoft has a chant
that identifies software as a service. There has been much speculation about
what that means to them. It is not real clear the exact place they will end up
but I have seen some of where they are heading with it and I also have a few
thoughts of my own. Related to this issue is what Microsoft calls .NET. I will
be getting into that issue more in the future but it relates to software as a
service. There will probably still be software that is packaged as a product
for a good long time but the trend that has already begun is that we may not buy
most of our programs outright in the future. We may instead subscribe to the
collection of applications we would like to use. Some accounting software for
example already provides a business model in which they do not sell the software
to the users, they merely lease the software to those users on a monthly or
annual contract. Oracle software products for example are licensed by a term.
You do not buy the product with the ability to use it forever. At some point
the license expires.
In the future no doubt we will see more software purchased
this way. As I said above we will probably not purchase the Microsoft Office
Suite we will be subscribing to the applications from that Suite that we want to
use. This subscription service will include upgrades and technical support no
doubt. This will allow software companies to drop their initial price and also
be able to count on a constant revenue stream. Now don’t get me wrong we
probably won’t end up paying less for the programs we use but hopefully we will
get more service with those programs.
Now for some .NET stuff. Eventually we may not even get a
disk for our software. I have already purchased software this way. The last
time I bought Norton Antivirus I didn’t go to a store I went online and typed in
my credit card and downloaded the file I needed then I installed it. I did all
of this in about 30 minutes and didn’t even have to get up from my chair. That
is great but more software will become available in an even different manner.
We will someday use Word and Excel through our Internet Browser. We will
subscribe to Microsoft Office and then we can use our Word program from anywhere
we can find a browser. To visualize this you can see this already at work if
you have a Hotmail email account. You can get your email through any browser.
More email is being offered this way as well so you may already be getting AOL
or other email in this manner.
In a similar but slightly different approach Microsoft
also has a product called Passport that they offer as a service through the
Internet. Passport is an authentication software service. Basically it helps
prove you are who you say you are. Once your identity has been established you
will have access to the services you request on the Internet. Microsoft uses
Passport to authenticate you for Hotmail and other services they provide. They
no doubt will also use it for the Microsoft Office Service. Right now these
services are free and the entry level will probably continue to be free.
However with Hotmail we have already seen that you can upgrade your service to
more features for a price.
Microsoft is not the only one currently providing a
software service. UPS has created ability for their customers to interact
directly with their package tracking system. Many of you have probably looked
up the status of a package you were expecting. In fact UPS not only allows you
to come directly to their website and check the status but they have written
their software so that a company such as Amazon.com can link a customer who has
purchased a few books or a DVD directly to the UPS site. Amazon.com goes even
further by providing their own service that lets you first track your order
inside their warehouse and then after UPS has picked it up and straight to your
door. Dell Computer is doing this same thing for their customers. General
Motors is doing a very similar thing with their GMBuyPower.com site. You the
customer can tie in directly with their internal information. This is an
example of a software service becoming an employee of your company. This
concept is what you may have read about called Web Services.
Another example of software as a service is also by
Microsoft (noticing a trend here?). As you may know Microsoft bought a leading
accounting software company. The company is Great Plains. Previous to that
deal Great Plains had purchased Solomon Software, which was another accounting
software company. As a side note I used to sell Solomon Software in Bellevue,
Washington. Great Plains or Solomon software can be purchased in a traditional
manor where you will receive a CD to install the software onto your server and
connecting the workstations to that data. Alternatively Great Plains works with
a number of vendors who provide Great Plains software as an Application Service
Provider (ASP). What this means is the ASP maintains the Server and Databases
(such as SQL), they will even back up the data. These ASP’s go much farther
than you can probably afford to go in protecting your data. One of the people I
looked at said they have redundant Data Centers, protect against fire and have
generators for power outages. The benefit is they maintain everything to keep
your accounting system humming. You pay for the entire service as a regular
monthly payment which will probably also include updates. All you have to do is
sign on to your Accounting system and begin to enter transactions. Clearly this
type of service will raise some flags for some of you but I believe that in time
those issues will be dealt with and you will begin to consider the
possibilities.
Software as a service and Web Services as you see already
exist. Where they are going and how they will be delivered may be difficult to
predict. I say that because often in business there are innovative people that
do what nobody expected, there are side effects or even mistakes that eventually
become new profitable ventures. I have no doubt that you will use or maybe
already use software as a service. I also have no doubt software services will
become an important part of your life and probably will redefine how you and
your company work. Here I have an admission and some homework. My admission is
that unless I change the way I do business, Software as a service will put me
out of business. I hate to admit that to those of you who are my customers but
I am glad to be honest with you and I must be honest with myself about this. In
a previous article I already told you about some new plans I have for my
business. I believe the shift into training is a critical one partially because
of this admission. If software is a service and packaged with that service is
technical support which will all be offered by major corporations such as
Microsoft, IBM, Oracle and Sun then much of what I currently do will go away
completely. One of the terms used to talk about these issues is “utility
computing”, this basically means that someday computing will be paid for and
delivered in a similar manner to electricity and water. Computing will simply
become another utility that we all rely on as needed.
Whether software is a service or a product, workers are in
great need of training on use of these products. I believe another change I
will need to make is in assisting companies in analyzing their business plans
and helping to make decisions about which software services they should
purchase, how those services will be used and how their employees will get the
skills to use them. Also I will be helping companies determine what software
services they could offer to existing customers and new customers. I will be
doing this because just like I believe this could put me out of business I
believe software as a service could also put you out of business. Never, you
say, the easiest way to go out of business is to stand still and not adapt to
the changes in business especially if your competitors do change.
Now it’s time for the homework. Your assignment is to
research available software services. See what already exists. I hope this
assignment doesn’t kill me off sooner than is my time to go but more important I
want my customers and acquaintances to be familiar with the possibilities before
the rest of the world. The next part of the assignment is to tell me what you
find out. I want to find out about these services as well. Also I will publish
some of the more interesting ones in this newsletter so that everyone can
benefit.
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