Wednesday, November 20, 2013

BIG’s Blog: Software as a Service is coming fast?

Software as a Service (SaaS) is coming on fast as the dominant enterprise IT. Some commentators such as Geoffrey Moore say it is a fait accompli. Nobody in the nonprofit fundraising world would use the term “fait accompli,” but clearly the ground is shifting.

For the fundraising world, IT revolves to a large degree around the donor management software system, a.k.a. the donor database. Mr. Moore’s arguments are cogent when focused on what he calls the tyranny of the product release model, and that can be easily understood by not only IT Directors but Executive Directors and Chief Financial Officers as well . . . to wit:
Anyone who has ever implemented an ERP application knows what I mean. The one thing you know for sure after having just implemented any given release of an enterprise software product is that under no circumstances will you ever implement the next one. After all, you have just spent 18 to 24 months, and up to ten times the license price of the software, to perform open heart surgery on your enterprise. Who in their right mind would want to undertake that again anytime soon?
Indeed, you not only forego the next release, but the one after it as well, and possibly the one after that if you can get away with it. Eventually, of course, this tactic catches up with you, and you once again agree to undergo open-heart surgery, freezing your enterprise’s other investments in IT for yet another 18 months or so.
So, to conclude, you have paid maintenance of 18 to 20% per year for anywhere from five to ten years for the express purpose of not availing yourself of the innovation created during that time period. This is horrible for you and no good for your vendor either, who must maintain back releases of the product with increasingly painful workarounds. It is not a vendor problem or a customer problem or even a product problem. It is a business model problem.

SaaS frees us all from the tyranny of the product release business model. Yes, with SaaS there is some level of ongoing disruption that you must cope with both within IT and with your user base, but please, do not even mention that in the same breath with the kind of burden the product release model imposes. Instead, thank your lucky stars you are getting innovation that you are paying for when you are paying for it. It is current, and so are you. This is huge!

We all need to keep our eye on this ball if Mr. Moore is right about it being a game changer.

Join us.

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