Featured Whitepaper

Featured Whitepapers

 Startup Stacks

Capital requirements for startups (at least in the technology industry) have been falling steadily. One major reason for this is the existence of stacks: technology stacks, strategy stacks and marketing stacks. Stacks are a set of preexisting components that can be snapped together, quickly reconfigured and dynamically repurposed depending on the particular challenges of the moment.

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Breaking the Cloud: Software as a Service Pricing, Components and Benefits 

The first benefit of cloud computing models that anyone thought much about was a financial one: instead of buying pieces of software, one could simply rent the software at whatever time and in whatever quantity one needed. This would effectively convert a fixed cost into a variable one, presumably saving the buyer money, or at least spreading the cash flows out over a longer period. As it turns out, this is one of the least interesting ways of looking at the cloud computing concept.

For vendors, the temptation is to simply forgo upfront revenues in favor of a recurring revenue stream. The problem is that these revenues may never adequately pay back the value of the foregone licensing fees. If, on the other hand, the rental price remains sufficiently high, then the customer faces a high, continuous cash outflow, diminished returns on investment in future periods and a stronger temptation to switch to a competitor. As a result, while Software as a Service rental models may be useful from the CFO’s perspective, in that they allow the software to fit into the operational budget, the model as a whole does not do the best job of fitting costs to benefits.

Attraction to the pricing model has distracted attention from the true value of the cloud for business—the demonstrable additional benefits provided by cloud architecture in three components: support, delivery and collaboration.

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