The introduction of cloud technologies faced all software service provides with a hard but needed decision. Relying only on licensed software, aimed at completing some special functions – or using the immense possibilities the cloud providers have to offer.
Cloud computing provides Software-as-a-Service approach instead of traditional licensing. Previously we had to buy licensed software in order to be able to receive updates and maintenance for it. License costs a lot and updates were released decently rarely, after a long testing and debugging. By paying a large initial fee we ensured safety of our ongoing operations and support availability. The same policy was applied to the new software development – you paid for it and waited for some time to be written and debugged.
Cloud technologies offer a wholly different approach. The task is outsourced – it is split between several lesser staffs that do their job much faster than a big and rather slowly operating firm. There are many benefits, mainly cutting down the production time and expenses. The code development time is decimated and the whole process takes weeks and days instead of months. Debugging is also done much faster along with implementation, so the tasks are completed significantly sooner.
The main benefits are:
- reduced production costs,
- greatly reduced time of development,
- greatly increased response time and ability to imply changes and updates real time,
- speeding up the customer contact – you are able to respond to requests in hours and days, not in weeks or months.
Unfortunately, this cancels the idea of licensing at once, as parts of the source code are given to a multitude of developers and cannot be controlled afterwards. This makes outsourcing a sensible matter that should be done with reliable partners.
However, cloud computing is not as powerful yet as the traditional approach, as it currently has only about 10% of the pie. Why so? Because people are afraid of innovations and mainly prefer things being done the traditional way. However, as analysis predicts increasing the cloud popularity up to 40% in several years, facing towards it as fast as possible is actually a wise move.
Microsoft did it already by announcing the weekly updates to Office365 service and many other applications. However, their method is only halfway there, as license for their products is still in place, thus making this an evolution, not revolution of Microsoft service.
On the other hand, Ariba cancelled their license policy way back in 2005 by transiting to SaaS model. The next three years were harsh, as revenues went down significantly because their services became substantially cheaper. As a result, they became incredibly more popular, resulting in average 20% growth of income since 2009, as company became one of the industry leaders. This incredible positive dynamics led to acquiring the company by SAP in 2012 for more than $4 billion, which surely is a success.
Using or avoiding cloud for now is optional, but it will become inevitable till 2020 and being ready for it is the best thing one can do.