The on-demand delivery model is rapidly changing the landscape of enterprise software and provides significant benefits to both ISV’s and customers. Here are some of the advantages of the on-demand model, comparing to the traditional on-premise model.
1. Time to value – with no up front capital investments and a 30-days unlimited trial period, customers can instantly gain business value and enjoy the benefits of the on-demand software. The implementation of an on-demand solution is notably shorter then implementing an on-premise solution.
2. Financial Simplicity – most on-demand offerings are based on a monthly subscription fee, aligned with the type of solution delivered (per seat, per transaction, per usage, and a couple of other experimental pricing models). The financial benefits of on-demand delivery model includes:
- No more up-front capital investments to purchase software licenses
- No more annual maintenance contracts with no exit clauses
- No need for purchasing and maintaining expensive servers.
- No software to install, manage, patch or upgrade
- In most cases, no consultants or integrators to tie it all together and go through months of implementations.
- No electricity, cooling or networking equipment upgrades.
3. No servers or software to maintain
Maintaining hardware and software is gone with the on-demand model. Many IT organizations are spending a great amount of time on managing expensive servers and software, dealing with staging environments and software upgrades, constantly patching software and servers to apply security patches and software fixes, all of which are not directly contributing to extracting more business value from the IT organization.
4. Vendor accountability
Traditional software delivery model benefited mostly the software vendors. Once the perpetual contract is signed and the ISV got paid (up front in many cases), he is off the hook. In the on-demand era, on-demand vendors must meet customer needs and earn his business every hour, day and month. This creates a tremendous challenge on the vendors, but serves as a great benefit to the customer. On-demand vendors are tuned to providing the best service for the customer needs and making constant improvements to their service and product offering, otherwise they won’t be in business for long.
5. High reliability & Security
This is often viewed as the Achilles’ heel of the on-demand model and wrongfully so in my opinion. Service delivery, high availability, security and SLA are all rooted in the DNA of an on-demand vendor. Most of the vendors today use SAS70 certified data-centers, 24×7 monitoring solutions and the latest and greatest security technologies, and are always on the lookout for the industry best practices that helps ensure security and SLA.
6. New functionality – no more software upgrades
One of the true beauties of the on-demand business is that the vendor can roll out new software functionality to his entire customer base very easily. As new versions of software are seamlessly available on-demand after the vendor releases a new version, customers can focus their resources on taking immediate business advantage from the new software functionality, instead of dealing with upgrade or patching cycles.
7. Always using the latest software release
One of the biggest challenges of traditional software vendors is supporting multiple releases of their own products (and arm-wrestling customers to upgrade to the latest release so they can drop-support for old releases – “are you still using NT4.0” ?), and testing new releases on multiple infrastructure scenarios that exist at customer premises (operating system, databases, application servers, programming languages, networking equipment and others). With the on-demand model, the vendor supports just a single version of his product (the latest release), and have to test and certify his product on a single infrastructure configuration – his own hosted infrastructure (and if needed, make changes to his infrastructure). For the vendor, the on-demand model greatly simplifies support and maintenance of product releases, and he can dedicate the sudden burst of free time to…. building new features and bringing more value to the customers.