Industry Pundits: Move to SAAS Is 'Permanent'By Peter Galli | Posted 2007-04-30 Email Print
The transition from packaged software to software as a service is well under way and will be a permanent change, speakers said at the New Software Industry conference.
MOUNTAIN VIEW, Calif.The move away from the traditional packaged software model toward software as a service, with all its associated new business and revenue models, is a permanent one, speakers said at the New Software Industry conference here on April 30.
"Prices will likely eventually go to zero for any standardized software product but, fortunately, the industry has found other ways to make money off software, Michael Cusumano, a professor at the MIT Sloan School of Management, said in a presentation titled "The Changing Business of Software."
While software product companies tend to have a given life cycle, there is now a different evolution curve, from product and process innovation to services. "Product platform disruptions are generating new services and business models," Cusumano said.
There are currently 200 software firms listed on U.S. stock exchanges, which is half of the 400 peak in 1997. The number of publicly listed IT services firms is also sharply down over the past five years, indicating more maturity in these markets, he said.
While only 20 percent of Web-based enterprise software vendors are publicly listed, Cusamano noted that the number of companies offering Web-based software is on the rise.
"There are also new business model dimensions, with all sorts of new revenue models, including subscription and advertising based ones. So, is this rise in services and business models temporary or permanent?" Cusamano asked.
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