A shift is happening in the software industry. Instead of having customers install software at their physical locations, software companies are increasingly renting web-based software over the internet on a monthly basis. But while this popular trend is token amongst most young startups and entrepreneurs, is it safe and reputable enough for all vendors to hop on board and use?
Most software companies get their revenue from “shelfware” (software that is rarely used and ends up on the proverbial shelf). Popular programs – from Quicken to SAP – for which customers pay the total cost up front – can be complicated, making them difficult to use and achieve maximum benefit from. However, once a customer has paid for these programs, there is little incentive for the company to follow up and ensure that it is fully updated to latest standards and working properly for the customer.
But things may be looking up in the realm of new software – in the stores and online. Companies like Journyx,KaleidaCare (foster care automation) and Affiniscape (association management) are quite successful in renting software over the web to their customers.
How will rented and cloud-based software help the customer? If customers sign up for a monthly service from one of these companies and the solution doesn’t work, customers will likely stop using the software after a month. This gives the software provider an incentive to pay attention to customer usage, understand whether or not the technology is providing business value, and strive to increase its value. Not only that, but the customers opinion will become the first priority, and help keep the product as up to date as possible for years to come.
When interests are aligned on both parties, everyone wins. Not only this, but going cloud makes it that much easier to have the latest and most up-to-date software available on the market. Your product will be continually improving as your company continues growing- making both the vendor and the client a match made in heaven.
And for small businesses, there are some additional benefits to renting software. The lower upfront costs of renting make it an easier investment for businesses tight on money. Paying for the rental over a period of time can make it easier for small businesses to charge their clients for software access by including it in the project estimate.
The future of the software industry is renting. And that’s good news for everyone.