SaaS is all the rage these days. It's the one "IT trend for 2009" no pundit has missed. But the reality is that many software customers don't want to jump on the SaaS bandwagon. For some, it's simply not an option.
Even so, that doesn't mean buyers don't long for the flexibility of a SaaS-like payment model. "Pay-as-you-go" is, after all, a pretty compelling alternative to "write a big check up front," especially when you're short on cash.
You'd think more vendors would have figured out by now that in this down economy, it's in their own interest to let customers decide how they want to pay for software. And yet, for the most part, enterprise software licensing models remain stuck in 1999.
There are exceptions. Some would say the popularity of SharePoint is partly attributable to its flexible, highly granular price structure -- and the fact that Microsoft will let you pay one third per year over a three-year period rather than requiring a lump sum up front.
But probably the best-known example of pay-as-you-go pricing in the ECM world is Alfresco, whose licensing has always followed a subscription model. (You can't license Alfresco Enterprise any other way.) The yearly subscription for an Alfresco Enterprise installation with Silver-level support runs $10K per management server CPU and $5K per delivery server CPU, per year, every year, for as long as you use the software.
Starting today, yet another ECM / WCM player dips its toe in the pay-as-you-go waters: namely, Day Software of Basel, Switzerland.
Day is rolling out a subscription version of its Content Repository Extreme enterprise repository under the moniker CRX One. The new offering (a repackaging of Day's Sling-based CRX 1.4.1) comes with the same hot-join clustering, load balancing options, and other enterprise features touted for Day Communiqué 5.1 and CQ DAM (the company's WCM and DAM offerings, respectively). But it is sold on a subscription basis: $18,500 per year, per installed instance (not per CPU), limited to one web application on one web domain -- a pricing model not very different from Alfresco's. (Perhaps that shouldn't come as a surprise. Recall that Day CMO Kevin Cochrane was, until recently, Alfresco's marketing chief.)
If you need to deploy additional CRX One instances (for a high-availability cluster, say), you simply buy additional subscriptions.
Will other WCM, ECM, and DAM players follow the pay-as-you-go precedent set by Alfresco and Day? It would be surprising if they didn't, frankly. Microsoft is already going in this direction (the company filed a patent application on the subject recently, in fact, but the Patent Office has knocked it down) and given that pay-by-the-slice is the standard pricing model in cloud computing, we think it won't be long before software licensing at all levels pivots in that general direction.
Procurement paradigms are changing -- that's the real significance of SaaS. Not everyone wants SaaS, yet...not everyone these days wants to (or can) shell out big bucks up front for something that may take years to realize a return on investment (if indeed that day ever comes). At least with pay-as-you-go licensing, if your project fails, you're not stuck with a million-dollar hole in your books. And if your project succeeds? You've reduced short-term (first year) expenses significantly. At a time when most enterprises are cutting back on capital expenditures in particular, that counts for a lot.