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The bill to Bill; Does SaaS subscription model spell trouble for emerging markets?

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Bill GatesI remember some time ago reading an article which alleged that the then CEO of Microsoft, William “Bill” Gates, envisaged a world where people would pay Microsoft for the use of software every month. In the pre-broadband (well broadband was in its infancy) pre-cloud days this seemed far fetched, difficult if not impossible and downright ridiculous. Like everything else the billionaire has predicted however, I have to concede, he was right and I was wrong. We now have Office 365 and some companies in addition to paying their ZESA and ZINWA bills, also have to pay the bill to Bill every month.

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In addition to the bill to Bill every other software vendor now have their bill too or are planning to do so.It seems more and more companies are joining the bandwagon and adding their names to the cloud frenzy. Adobe decided to kill Creative Suite and go subscription only, because “customers overwhelmingly prefer it.” Only we are left wondering which customers? Google Apps for business charges a minimum of $5/user every month or $50/user per year. Sage, a popular accounting software firm, introduced cloud based subscription versions.

At the surface the whole model looks innocuous- a sensible progression of the cloud model where people do not have to care about upgrading their software. I believe however that the subscription model is an ill omen to us in the third world in general and Zimbabweans in particular. Unlike with the traditional model where people paid once in order to own the software, or at least the rights to use the software, the subscription model requires payments at set intervals for example once every year for Google Documents, monthly for Adobe and quarterly for Microsoft.

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A person would have to pay in order to continue to use the software whether they want to or not. With the traditional model you paid for your current version for example Office XP and could use it indefinitely until you had enough money to upgrade. I know some typists in town who still use Office 2003. Sometimes not upgrading is not even money about at all. Plenty of times a person has become so used to a particular version there are simply unwilling to upgrade and go through the learning curve again. The fact that the subscription model is a Procrustes bed by default is worrying.

It is a fact that most people use pirated software in this country and the cloud-subscription model might leave more and more of these people in the cold. The list of these pirates include schools, hospitals, councils and even universities who simply cannot afford the cost of software on their tight budgets and we know there are a lot of these in Zimbabwe. For a majority of these FOSS is not an option or is simply undesirable hence their resort to piracy. This might lead to an increase in the IT gap between developing and developed countries and this is not helped by the fact that most of the software vendors are in developed countries and the payment of subscriptions would cause a further increase in the imbalance of trade.

Despite all the strides that have been made in this country, broadband is still expensive, data caps are very real and downtime not at all unusual. Yet an internet connection is an essential part of the cloud and subscription model. Imagine if your connection was to go down during year-end financial statements and you had an accounting suite in the cloud. The subscription model increases the total cost of ownership by requiring a constant internet connection which might not be desirable or possible with a startups and SMEs.

Whether you are in the third world or not privacy issues still crop up whenever you use cloud services. Who has the right to view your data and what laws are applicable when it comes to handing off the data to authorities? Then there is also the issue of vendor lock in. What if you want out does the cloud service give you the option to download the data in a standard format so that you can use this data when you migrate to a rival service?

I think for now software vendors should have two versions of software, much like Microsoft have done. A traditional pay once and own the rights to use version as well as a subscription model for those who want it and can pay the bill. I also think the “my way or the highway” attitude from Adobe is unfortunate for the developing nations. What do you think?


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8 thoughts on “The bill to Bill; Does SaaS subscription model spell trouble for emerging markets?

  1. i think the world can’t wait for developing countries. The onus is on them to innovate around their own circumstances even if it simply means creating offline modes for cloud software.

    1. The problem is, not all Adobe customers are from developed countries. Another problem, Creative Cloud is NOT available in all developed countries either. There are so many parameters that Adobe didn’t consider when introducing CC.

  2. Don’t forget to keep your 15% with holding tax to pay to Zimra for services provided outside the country. I am sure MS is willing to accommodate you only paying them 85%… in reality we are going to be expected to pay 15% on top so it will be even more expensive for us here.

  3. adobe have just released creative cloud which is basically a “cloud” edition of there creative suite packages with a monthly subscription fee – while i’m still concerned about whether adobe will follow through on keeping software up to date or not while pocketing my precious dollars its no different to having CS6 really except billed monthly – theres no strict requirement to always be online to use the software, its only calling home at regular intervals and linked to your adobe ID to prevent hacking – although i’m sure some talented crackers will eventually break it – i can see many many larger software providers following this same model

    the worrying thing to me is that whether the said software companies will continue actually updating and improving the product to make it worthwhile to continue paying the subscription fee

    i am a strong advocate of you buy the software its yours to do what you like with it for as long as you like and not this, you only pay to be able to use the software and when you stop paying you stop getting to use it – this works if the software lives in the cloud but i can understand companies like adobe wanting to guarentee there revenue stream

  4. Cloud-based software deployments will not apply to all types applications. It may be the magic pill that a software development firm/publisher has been waiting for but it has very little motivation/benefit for the user. It is such a great inconvenience to the user. There are instances where SaaS is invaluable. Office365,Google Docs & Apps, SalesForce etc seem to be doing very well. But I doubt Adobe CS on the cloud is something people would want.

    Perhaps in the developed world where they pay for broadband by the penny.

    I am still using Photoshop & Illustrator CS2 and they meet my full needs. There are certainly better features in CS6 but I cant imagine running such an app off the cloud. Some of these companies are killing themselves.

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