ASP business model
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Someone here has experience with Application service provider (ASP)[^], the customer side and the seller side? We plan offer some services using this model, then I'm interested in listen your tips, hints, suggestions, rants, comments, etc.
For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.(John 3:16) :badger:
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Someone here has experience with Application service provider (ASP)[^], the customer side and the seller side? We plan offer some services using this model, then I'm interested in listen your tips, hints, suggestions, rants, comments, etc.
For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.(John 3:16) :badger:
ASP also know as Software as a Service seems to be enjoying some traction again, it crops up every so often and then goes away. I think its rebirth may be simply a reflection of how much better software producers have become in ensuring there software is not pirated to the same degree. Let me explain ... If you bought a copy of DOS in the early days of the IBM PC, it would have cost $40, but you see the thing is, it really didn't cost forty dollars. What do you mean you say .... I clearly remember opening my wallet, taking out forty bucks, handing them over and got a copy of DOS on a couple of floppy disks. What I mean is that, when you got that copy home, you installed it on your computer and then later on an old backup computer. So suddenly the cost of that copy of DOS has dropped from $40 to $20, because its running at two seats not one. Of course, we all know that one copy of DOS would have ended up on quiet a few computers. Microsoft's estimates back then said that for every one computer with a licensed copy of the OS, there were a further nine unlicensed. This is why I say that better copy protection is driving Software as a Service (SAS). SAS forces you to have a license for every user, so back in the days you where getting the extra few freebie licenses by not using SAS, you wouldn't have considered it. Now because copy protection is stronger, suddenly your forced to have one license per user anyway, so you might as well get deployment, management and maintenance of the software thrown in for free, by using an SAS model. -- modified at 6:51 Monday 9th April, 2007
Regards Ray "Je Suis Mort De Rire" Blogging @ Keratoconus Watch
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Someone here has experience with Application service provider (ASP)[^], the customer side and the seller side? We plan offer some services using this model, then I'm interested in listen your tips, hints, suggestions, rants, comments, etc.
For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.(John 3:16) :badger:
From my view as a consumer: A remotely hosted application has many drawbacks that you have to offset somehow. First, the biggest worry: Availability When I buy from the shelf,I pretty much know I pay $899, I can run it on my PC, and it will cntinue to work the way it did. My network may be down or your servers may be under attack, your company might go belly up or be in the legal claws of an prelimenary injunction or acquired by Greedy Venture Capital Magnate, Inc. - I can still run my software. I might be barred from updates, not be able to migrate to a new OS, whatever - I can still run the software until the problem is resolved. There is a strong theme of dependency here. My network, my PCs, my employees are in my control, relying on your network, software and service makes me depend on yu. Second, Security. shelf software: When it runs in my network, my network is secured, I trust my administrator and the people working with the software, I can feel safe. With remotely hosted software, there are more points of attack. Additinally, if documents are stored remotely, the concerns of availability are extended to yur documents. These concerns add to the use of the software. "Can we risk to edit this new kind of data remotely?" Third, Usability There is (as f yet) no way to have a remote interface be as responsive as a client one. It has been observed that lag adds to mental load (which is bad)* Last, Acquisition I can pretty much go to the store, buy the software and be done. True, Software EULAs aren't a piece of cake either, but all the problems are delayed. With an ASP, I have to decide all above issues before I can start using the software. Maybe that changes once ASP becomes as commonplace as shelf software, but I doubt that is anytime soon. Now how can you offset that? Purchase Cost Since you can expect a continuous revenue stream, you can actually be cheaper for many applications, and where you are more expensive, it isn't an up-front investment. Also, youdon't have to account for piracy. Maintenance You can score a lot of points for software that is somewhat complex to administer - if I can fire off an request for a change by e-mail and have it done tomorrow, instead of having to dig through books and manuals, I can grow quite attached. Features and Goodies Some ASP applications have a natural benefit from being ASP - e.g. reach from everywhere. There may be other benefits, too. e.g. no upd
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From my view as a consumer: A remotely hosted application has many drawbacks that you have to offset somehow. First, the biggest worry: Availability When I buy from the shelf,I pretty much know I pay $899, I can run it on my PC, and it will cntinue to work the way it did. My network may be down or your servers may be under attack, your company might go belly up or be in the legal claws of an prelimenary injunction or acquired by Greedy Venture Capital Magnate, Inc. - I can still run my software. I might be barred from updates, not be able to migrate to a new OS, whatever - I can still run the software until the problem is resolved. There is a strong theme of dependency here. My network, my PCs, my employees are in my control, relying on your network, software and service makes me depend on yu. Second, Security. shelf software: When it runs in my network, my network is secured, I trust my administrator and the people working with the software, I can feel safe. With remotely hosted software, there are more points of attack. Additinally, if documents are stored remotely, the concerns of availability are extended to yur documents. These concerns add to the use of the software. "Can we risk to edit this new kind of data remotely?" Third, Usability There is (as f yet) no way to have a remote interface be as responsive as a client one. It has been observed that lag adds to mental load (which is bad)* Last, Acquisition I can pretty much go to the store, buy the software and be done. True, Software EULAs aren't a piece of cake either, but all the problems are delayed. With an ASP, I have to decide all above issues before I can start using the software. Maybe that changes once ASP becomes as commonplace as shelf software, but I doubt that is anytime soon. Now how can you offset that? Purchase Cost Since you can expect a continuous revenue stream, you can actually be cheaper for many applications, and where you are more expensive, it isn't an up-front investment. Also, youdon't have to account for piracy. Maintenance You can score a lot of points for software that is somewhat complex to administer - if I can fire off an request for a change by e-mail and have it done tomorrow, instead of having to dig through books and manuals, I can grow quite attached. Features and Goodies Some ASP applications have a natural benefit from being ASP - e.g. reach from everywhere. There may be other benefits, too. e.g. no upd
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ASP also know as Software as a Service seems to be enjoying some traction again, it crops up every so often and then goes away. I think its rebirth may be simply a reflection of how much better software producers have become in ensuring there software is not pirated to the same degree. Let me explain ... If you bought a copy of DOS in the early days of the IBM PC, it would have cost $40, but you see the thing is, it really didn't cost forty dollars. What do you mean you say .... I clearly remember opening my wallet, taking out forty bucks, handing them over and got a copy of DOS on a couple of floppy disks. What I mean is that, when you got that copy home, you installed it on your computer and then later on an old backup computer. So suddenly the cost of that copy of DOS has dropped from $40 to $20, because its running at two seats not one. Of course, we all know that one copy of DOS would have ended up on quiet a few computers. Microsoft's estimates back then said that for every one computer with a licensed copy of the OS, there were a further nine unlicensed. This is why I say that better copy protection is driving Software as a Service (SAS). SAS forces you to have a license for every user, so back in the days you where getting the extra few freebie licenses by not using SAS, you wouldn't have considered it. Now because copy protection is stronger, suddenly your forced to have one license per user anyway, so you might as well get deployment, management and maintenance of the software thrown in for free, by using an SAS model. -- modified at 6:51 Monday 9th April, 2007
Regards Ray "Je Suis Mort De Rire" Blogging @ Keratoconus Watch
I must add another reasons to go SAS (or said ASP) for software maker. Direct contact with customer in very low cost of sales environment. We did build Image processing software for the printing industries. It's a dispersed market and we had to go trough "distributors" or "OEM" As vendor in a small "niche", software price were high, 30K$ minimum. But they were sold end user for 150K$ without any good cost justification for such a margin. Customers anyway would have to pay an extra 13% for maintenance, charged by distributors, that we never smmell a penny from, etc ... A 5-fold margin could be understood in masse market, not in our business Anyway, we didn't collect enough money to feed our development, and we did bankrupt. Our software were very good, still in use and there still about 15% chance that whatever you read in English, Spanish or French had gone trough our solutions. How could this happen without warning? Very simple: development cost didn't incorporate enough provision for the huge cost of suppling simple enough installation procedure. All the bells and whistles distributors or OEM were supposed to put around, they "forget". They then ask us to do, cost justifying their margin by "how hard it is to be the inbetween", How good tomorrow will be. Their technicians didn't even all know how to install Windows. OK I know, it can be cumbersome, but on your PC for yourself. Imagine that somebody gave you 70K$ each time you do it, I think you would feel that it's a steal) So.... So we stop selling software, now we rent it. SAS is THE solution for that. Don't mix-up Internet: the media which allow payement for services, with the Web: more a mentality or a community were everything is supposed to be free. Now our customers are VERY happy! The startup cost is 0, they pay as they use it. Small companies that would have been out of business just because they can afford going Digital are smiling again. Big customers endorse it too. It cost them about 3 times more than it would if we did sell the soft, BUT!! - 2 times cheaper that what they used to pay for TCO - It's not a capital expenditure. - They don't have to care about obsolescence (a "freezing" decision factors in expensive high tech sold to non techies peoples); we take the burden of it. - Universal around the world. Etc.. And we, ALL of us, (understand including our customers), are back making money. Competitions are left in the dust, unable to give any proper answers. etc ... But there is a KEY
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From my view as a consumer: A remotely hosted application has many drawbacks that you have to offset somehow. First, the biggest worry: Availability When I buy from the shelf,I pretty much know I pay $899, I can run it on my PC, and it will cntinue to work the way it did. My network may be down or your servers may be under attack, your company might go belly up or be in the legal claws of an prelimenary injunction or acquired by Greedy Venture Capital Magnate, Inc. - I can still run my software. I might be barred from updates, not be able to migrate to a new OS, whatever - I can still run the software until the problem is resolved. There is a strong theme of dependency here. My network, my PCs, my employees are in my control, relying on your network, software and service makes me depend on yu. Second, Security. shelf software: When it runs in my network, my network is secured, I trust my administrator and the people working with the software, I can feel safe. With remotely hosted software, there are more points of attack. Additinally, if documents are stored remotely, the concerns of availability are extended to yur documents. These concerns add to the use of the software. "Can we risk to edit this new kind of data remotely?" Third, Usability There is (as f yet) no way to have a remote interface be as responsive as a client one. It has been observed that lag adds to mental load (which is bad)* Last, Acquisition I can pretty much go to the store, buy the software and be done. True, Software EULAs aren't a piece of cake either, but all the problems are delayed. With an ASP, I have to decide all above issues before I can start using the software. Maybe that changes once ASP becomes as commonplace as shelf software, but I doubt that is anytime soon. Now how can you offset that? Purchase Cost Since you can expect a continuous revenue stream, you can actually be cheaper for many applications, and where you are more expensive, it isn't an up-front investment. Also, youdon't have to account for piracy. Maintenance You can score a lot of points for software that is somewhat complex to administer - if I can fire off an request for a change by e-mail and have it done tomorrow, instead of having to dig through books and manuals, I can grow quite attached. Features and Goodies Some ASP applications have a natural benefit from being ASP - e.g. reach from everywhere. There may be other benefits, too. e.g. no upd
peterchen wrote:
First, the biggest worry: Availability When I buy from the shelf,I pretty much know I pay $899, I can run it on my PC, and it will cntinue to work the way it did. My network may be down or your servers may be under attack, your company might go belly up or be in the legal claws of an prelimenary injunction or acquired by Greedy Venture Capital Magnate, Inc. - I can still run my software. I might be barred from updates, not be able to migrate to a new OS, whatever - I can still run the software until the problem is resolved.
absolutely. This right here is the biggest reason why I refuse to even consider the service model for any normal home use software. The only potential exception would be something like tax prep software that is obsoleted after a single year regardless.
-- CleaKO The sad part about this instance is that none of the users ever said anything [about the problem]. Pete O`Hanlon Doesn't that just tell you everything you need to know about users?
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ASP also know as Software as a Service seems to be enjoying some traction again, it crops up every so often and then goes away. I think its rebirth may be simply a reflection of how much better software producers have become in ensuring there software is not pirated to the same degree. Let me explain ... If you bought a copy of DOS in the early days of the IBM PC, it would have cost $40, but you see the thing is, it really didn't cost forty dollars. What do you mean you say .... I clearly remember opening my wallet, taking out forty bucks, handing them over and got a copy of DOS on a couple of floppy disks. What I mean is that, when you got that copy home, you installed it on your computer and then later on an old backup computer. So suddenly the cost of that copy of DOS has dropped from $40 to $20, because its running at two seats not one. Of course, we all know that one copy of DOS would have ended up on quiet a few computers. Microsoft's estimates back then said that for every one computer with a licensed copy of the OS, there were a further nine unlicensed. This is why I say that better copy protection is driving Software as a Service (SAS). SAS forces you to have a license for every user, so back in the days you where getting the extra few freebie licenses by not using SAS, you wouldn't have considered it. Now because copy protection is stronger, suddenly your forced to have one license per user anyway, so you might as well get deployment, management and maintenance of the software thrown in for free, by using an SAS model. -- modified at 6:51 Monday 9th April, 2007
Regards Ray "Je Suis Mort De Rire" Blogging @ Keratoconus Watch
-
I must add another reasons to go SAS (or said ASP) for software maker. Direct contact with customer in very low cost of sales environment. We did build Image processing software for the printing industries. It's a dispersed market and we had to go trough "distributors" or "OEM" As vendor in a small "niche", software price were high, 30K$ minimum. But they were sold end user for 150K$ without any good cost justification for such a margin. Customers anyway would have to pay an extra 13% for maintenance, charged by distributors, that we never smmell a penny from, etc ... A 5-fold margin could be understood in masse market, not in our business Anyway, we didn't collect enough money to feed our development, and we did bankrupt. Our software were very good, still in use and there still about 15% chance that whatever you read in English, Spanish or French had gone trough our solutions. How could this happen without warning? Very simple: development cost didn't incorporate enough provision for the huge cost of suppling simple enough installation procedure. All the bells and whistles distributors or OEM were supposed to put around, they "forget". They then ask us to do, cost justifying their margin by "how hard it is to be the inbetween", How good tomorrow will be. Their technicians didn't even all know how to install Windows. OK I know, it can be cumbersome, but on your PC for yourself. Imagine that somebody gave you 70K$ each time you do it, I think you would feel that it's a steal) So.... So we stop selling software, now we rent it. SAS is THE solution for that. Don't mix-up Internet: the media which allow payement for services, with the Web: more a mentality or a community were everything is supposed to be free. Now our customers are VERY happy! The startup cost is 0, they pay as they use it. Small companies that would have been out of business just because they can afford going Digital are smiling again. Big customers endorse it too. It cost them about 3 times more than it would if we did sell the soft, BUT!! - 2 times cheaper that what they used to pay for TCO - It's not a capital expenditure. - They don't have to care about obsolescence (a "freezing" decision factors in expensive high tech sold to non techies peoples); we take the burden of it. - Universal around the world. Etc.. And we, ALL of us, (understand including our customers), are back making money. Competitions are left in the dust, unable to give any proper answers. etc ... But there is a KEY
Good, very interesting post! Really thank you very much for your testimonial and for the hints! :)
For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.(John 3:16) :badger:
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peterchen wrote:
First, the biggest worry: Availability When I buy from the shelf,I pretty much know I pay $899, I can run it on my PC, and it will cntinue to work the way it did. My network may be down or your servers may be under attack, your company might go belly up or be in the legal claws of an prelimenary injunction or acquired by Greedy Venture Capital Magnate, Inc. - I can still run my software. I might be barred from updates, not be able to migrate to a new OS, whatever - I can still run the software until the problem is resolved.
absolutely. This right here is the biggest reason why I refuse to even consider the service model for any normal home use software. The only potential exception would be something like tax prep software that is obsoleted after a single year regardless.
-- CleaKO The sad part about this instance is that none of the users ever said anything [about the problem]. Pete O`Hanlon Doesn't that just tell you everything you need to know about users?
dan neely wrote:
I refuse to even consider the service model for any normal home use software
Me too. But if you stop to think about, e-mail and instant messaging systems are "normal home use software".
For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.(John 3:16) :badger:
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peterchen wrote:
First, the biggest worry: Availability When I buy from the shelf,I pretty much know I pay $899, I can run it on my PC, and it will cntinue to work the way it did. My network may be down or your servers may be under attack, your company might go belly up or be in the legal claws of an prelimenary injunction or acquired by Greedy Venture Capital Magnate, Inc. - I can still run my software. I might be barred from updates, not be able to migrate to a new OS, whatever - I can still run the software until the problem is resolved.
absolutely. This right here is the biggest reason why I refuse to even consider the service model for any normal home use software. The only potential exception would be something like tax prep software that is obsoleted after a single year regardless.
-- CleaKO The sad part about this instance is that none of the users ever said anything [about the problem]. Pete O`Hanlon Doesn't that just tell you everything you need to know about users?
whilst I agree nobody wants a network delivered $800 operating system, I think the case for cheaper (say, free or very low cost) productivity tools delivered over the internet will become a dominant business model in the future. It's not going to displace a full-featured word processing or photo editing, but plenty of other applications can be delivered on an 'as-needed' basis. I like the idea of renting time for a particular application while I need it, and not having a shiny shrink wrapped box sitting on my shelf mocking me with it's sales tag after I have finished. Trip planning software is one I can think of straight away (because the box is mocking me as I type) The number of web-based email accounts (hotmail, yahoo, gmail) is testament to the fact that people like a server delivered application when the model is right. And let's not forget that the business consumer and personal consumer are not the same. The business consumer is less price sensitive but more time sensitive - because time is money in a business. I hear from clients all the time 'just make it work', 'take away the hassle', 'no I didn't run the backup'. Having a server-based solution fixes up the major problems with business software of : - deployment (you can service a larger geographical base without a national sales team) - upgrades (test your upgrade in your test environment, roll it out once) - support (it's easy to verify that the server app is working OK, it's the clients reponsibility to have a working computer) - backups and disaster recovery (how many businesses do you see with a server sitting under the receptionists desk, with the single set of business-critical data on it?) - financing (you can offer different payment models, from an upfront fee to a payment plan - collections (if you're owed money, just turn off the service until the situation is rectified)
Bruce Chapman iFinity.com.au - Websites and Software Development Plithy remark available in Beta 2
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whilst I agree nobody wants a network delivered $800 operating system, I think the case for cheaper (say, free or very low cost) productivity tools delivered over the internet will become a dominant business model in the future. It's not going to displace a full-featured word processing or photo editing, but plenty of other applications can be delivered on an 'as-needed' basis. I like the idea of renting time for a particular application while I need it, and not having a shiny shrink wrapped box sitting on my shelf mocking me with it's sales tag after I have finished. Trip planning software is one I can think of straight away (because the box is mocking me as I type) The number of web-based email accounts (hotmail, yahoo, gmail) is testament to the fact that people like a server delivered application when the model is right. And let's not forget that the business consumer and personal consumer are not the same. The business consumer is less price sensitive but more time sensitive - because time is money in a business. I hear from clients all the time 'just make it work', 'take away the hassle', 'no I didn't run the backup'. Having a server-based solution fixes up the major problems with business software of : - deployment (you can service a larger geographical base without a national sales team) - upgrades (test your upgrade in your test environment, roll it out once) - support (it's easy to verify that the server app is working OK, it's the clients reponsibility to have a working computer) - backups and disaster recovery (how many businesses do you see with a server sitting under the receptionists desk, with the single set of business-critical data on it?) - financing (you can offer different payment models, from an upfront fee to a payment plan - collections (if you're owed money, just turn off the service until the situation is rectified)
Bruce Chapman iFinity.com.au - Websites and Software Development Plithy remark available in Beta 2