Software usage has come a long way from the early days of desktop computing. The proliferation of software as a service (SaaS) is the biggest change organisations have had to adapt to in recent years but even that is developing rapidly. The next 12-18 months are likely to see user organisations and software suppliers facing significant changes as this fast-moving industry continues to evolve.
What is likely to change for SaaS this year?
SaaS refers to any software which is owned and managed by a provider remotely where the delivery of the software is based on a common code utilised by all contracted customers. Charges are largely dependent on usage so SaaS has proven a popular form of digital services delivery. Over the next 12-18 months SaaS and the assumptions its popularity has been dependent upon will be challenged though.
Organisations and their IT departments increasingly recognise that there are possible inefficiencies and hidden costs in running a blanket SaaS model and that a proactive and more selective approach to SaaS subscriptions needs to be taken. While 2015 will see businesses continuing their use of SaaS applications, many will deem it necessary to review the purported cost and waste savings subscriptions to SaaS services apparently bring.
Commercial pressures on software providers
The realisation by businesses that there are now better purchasing models for their software applications than perpetual licence monopolies is likely to translate into licensing renewals between provider and user-organisation being fraught with ever-tougher negotiation. Indeed, many user organisations already understand the benefits of subscription licenses and utility models where the price paid is determined by the specific types or quantities of use.
In reaction to the ongoing commercial pressures on software providers, user organisations can expect that software audits will increase. The ability for software providers to exceed revenue targets will increasingly rely upon their extraction of fees from clients through reliance upon software license audit clauses that are tucked away in most software contracts. This will add to the risk profiles of companies and organisations of all different sizes and natures.
Other trends software users will need to take into account
As well as focusing on the efficiency of SaaS contracts and the risk of traditional software audits, organisations’ IT departments will need to keep abreast of other trends forecast in the coming months. Agile development, for example, is expected to continue its rapid rise to prominence throughout 2015 and beyond.
Agile software development inherently brings with it frequent application updates and enhancements to software which may stretch IT departments’ resources. Practices for testing the organisation’s applications for compatibility with these changes (Application Readiness) will need to be optimised and, where feasible, automated to maintain efficiency.
Comment
As ever, software technology is advancing at an exponential rate and businesses on both sides (providers and users) must have an eye to the practical and commercial implications in the coming months. Doubtless a few surprises will also pop up as the year progresses.
