The Insider's Guide to Next-Generation BPM
By Tien Tzuo, Founder and CEO, Zuora , 08/06/2008
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The last few years have seen the success of Software-as-a-Service, or SaaS, spread beyond poster child Salesforce.com to many other well-known companies: Taleo, NetSuite, SuccessFactors, Concur, and more. But there is always a contingent that asks: is SaaS just hype? Or rather, is this a permanent change in the technology landscape?
It does seem that an overwhelming number of software companies are opting to release their products from the cloud as opposed to CD form. The world now accepts Saleforce.com’s initial premise of software living on the Internet as a core tenet, and this methodology is quickly spreading beyond software. All around us we see everything from consumer product companies to medical services adopting the subscription model.
In fact, if you look beyond SaaS, you'll see the subscription model taking hold everywhere. Take for instance: Zipcar, instead of buying one car, subscribe to an entire fleet; Netflix, don’t buy DVDs, subscribe to a service and get as many movies as you want for as long as you want; Bag Borrow or Steal, as noted in the “Sex & The City Movie,” why spend all your savings on one designer bag when you can have access to every design for every occasion? There are also medical practices moving to a membership model, accountants moving to a retainer model, even farms allowing buyers to subscribe monthly for fresh produce. On Wall Street, the one bright light is the wealth management industry, with a fees-based approach, based on assets under management, which translates to steady, predictable revenues.
And it’s no wonder all of these industries are moving towards the subscription model. With more selection, greater control, and fewer upfront costs, subscription services make it easy for everyone to buy less and subscribe to more.
So why is this model so attractive? The reasons that made SaaS the dominant model for creating and delivering applications are the same reasons why subscriptions are taking hold in all other industries:
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