New Enterprise Software Business Models


Bruce Daley is moderating a discussion on new enterprise software business models. The following is a summary of a lot of comments from many people.

Subscription software model has significant benefits for software vendors: they don't have to spend large amounts of money in maintaining old releases, ensuring backward compatibility, and so on. Another advantage is that ongoing revenues are easier to predict. In the traditional perpetual license model, customers wait for the last two weeks of the quarter and beat you up on price. You never know going into the last two weeks what your sales will be.

The downside of the annuity business is that you've got twelve closings per year instead of four. You can't catch up if you miss a month. You have to perform every month to keep customers and keep the revenue flowing. The other side of the coin for maintaining old releases is that its much more difficult to do revolutionary upgrades because everyone is coming along at the same time.