SaaS / Software + Services – so much that is different, so much is the same

By: John Frame

This past summer, in my conversations with customers, analysts and prospects, a recurring theme was that for all the differences between SaaS and Software + Services models, the number of things that remain the same is remarkable.　Software as a Service, or SaaS, is the latest software delivery model.　 As such, SaaS can be a new way for you to have a relationship with your end-users.  It can address long upgrade cycle times and provide an advantageous cost model.

All indications show that SaaS is likely to follow the same adoption curve as any other new technology -- high growth in the initial phase, but slower growth over time, which makes sense. In fact, many of you are already thinking about and planning for this technology change and are putting in place efforts in two areas.  First, you’re making changes to your product plans, packaging and pricing to enable penetration into adjacent or alternative markets.  Second, you are making changes to ensure that you are fairly compensated for the value that your end-users are getting from the service.

Today access to your services is universally by means of a name and password, or authentication.  Most SaaS / Software + Service providers recognize the problems with authentication and are using session monitoring to try to detect over use or malicious use of the software.  Details on the user sessions are compiled. Reports are generated and based on suspected patterns of abuse; offenders are flagged and targeted for further conversations.  Session monitoring does give software vendors a level of understanding of who is using what. However, it tends to highlight the clear or extreme cases, and does not pick up on cases where the patterns may not be as clear, or if the misuse is more sophisticated. Please remember, unlike traditional software, vendors/manufacturers have a real cost associated with every user of the service regardless of whether the customer paid or not.  Understanding who is using the service and getting fairly compensated by them is a great way to expand profitably.

Licensing services offer some key benefits:　

· Licensing + Authentication provides software vendors and manufacturers granular reporting capabilities allowing them to identify the specific devices where credentials were used during a specific period of time. These reports are far more precise and accurate than what would be generated from simply session monitoring.　

· You can choose to reduce or alter the features available to the user if they are on an "unlicensed" device.　

· Finally, the technology can be used to lock out users from accessing the service if the credentials are being used on unlicensed or too many different devices

By including licensing in your service, all of these benefits are available to you.  You can control all of these different options from the back office and modify the approach based on different users, services, geographies and channels as needed.

I’m going to go out on a limb and say that it’s highly likely you are reading this blog post because you use or offer a service that combines Authentication and Licensing.　

Pop quiz for a $25 Gift Card!

I’ve got a $25 Starbucks card for the first person who can, as a comment to this blog post, name the service with the following characteristics that combine Authentication and Licensing:

· The service launched on April 28, 2003.　

· The service is accessed with a name and password, but that name and password only work on 5 Windows or MAC machines over a two year period.　

· The service does not let you use those credentials on a sixth machine in less than two years; you need to contact the provider of the service.　

What is this service called? (Please provide your answer in the comment box)

　

　

Comments

[chris holland]

iTunes

[Christopher Painter]

I don't see any comments yet, so is it too late to say iTunes music store?

As a side note, I remember a lot of people coming to the Community Forum back then to report problems with the iTunes installer and that InstallShield was working with Apple to help them get it right! Interesting that even with SaaS, you still have to figure out how to get deployment done right.

[John Frame]

Christopher, you are right iTunes is what I was talking about. Someone snuck in just a little ahead of you though for the gift card. Your closing words are right down the line of Part 2 that is coming. “even with SaaS”, what we are working with here is still software. Many things do change but far more are the same. Let’s expand on that in Part 2.