Guest View: The rise of the software-enabled business
By Jerry Smith
June 1, 2008 —
(Page 1 of 3)
Marc Benioff, CEO of Salesforce.com, got it only partly right when he proclaimed the “end of software.” There is no question that software as a service is having a huge impact on the traditional software company. Yes, the old construct of license sales is being challenged; companies are seeing the value in maintenance contracts, and the upgrade and implementation costs are skyrocketing. In general, costs are rising and value is declining—two unfavorable trends for any business.
Indeed, there is a movement afoot in the industry, but it’s not simply a change in the way that companies procure software. The bigger trend is the increasing overlap between “software” and other products and services. Companies that you’d never think were in the software business are in it in a big way. News Corp.’s acquisition of YouTube is a prime example. And half the companies in the world are more worried about competing with Google than with their traditional competitors.
So it’s not the end; it’s the pervasiveness of software in just about every business that is the trend. Software is becoming more important than ever in delivering all manner of products and services. In short, it’s the rise of the software-enabled business (SWEB).
So, what exactly is a SWEB? It’s a new term for companies that don’t sell software in the traditional manner that an ISV does, but it still remains core to generating revenue from products and services. The software may be monetized by charging per transaction (Amazon, eBay BestBuy), through a subscription fee (Salesforce.com), via an advertising supported model (Google) or as a simple enabler of the business (e.g., a mobile banking platform) where revenues are not directly tied to usage. Rather, those revenues are part of enhancing the service delivery or improving customer acquisition/retention strategies (Charles Schwab, Bank of America, E-Trade).
Now you may put some of those companies into the SaaS category. But, as I heard recently, that may be the worst acronym that the software industry ever created, because it keeps everyone thinking about software only. The truth is that software may no longer be a market, but just a delivery mechanism. SWEB may be no better as an acronym, but it applies to a broader set of businesses. Many companies now believe they compete with Google, and they may not now nor ever have considered themselves a software company. But if they don’t start operating more like one, it could be their downfall.
Related Search Term(s): SOA & SaaS
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