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The rental model changes the business risks in the software industry. Its lower risk for the buyer because you have the right to cancel. Its higher risk for the software vendor because they have to become a farmer instead of a hunter in the long run. They have to continue to add value so they dont lose that contract every year.
Causing a further squeeze: budgets are tight. While the software industry is growing (in fact its the fastest growing segment in IT) and the overall tech industry is growing, budgets dont seem any more flexible.
People are getting smarter, she says. Its not the end of the 90s theres not money out there where I can just throw it against the wall and hope it sticks. People are being held more accountable.
Certain Things Never Change
As the software industry changes, Theres not going to be a winner and a loser, Correia says. Its going to be an evolution rather than a revolution.
Furthermore, its not likely that todays established vendors whether they rent or sell or do some combination are about to disappear.
Theres nothing forcing people to rip out their old systems, she says. Established vendors have a powerful toehold. Once they own your marketplace, and your vendors are written around it, and your datas out there, its hard to rip it out even if its rental.
In other words, inertia is powerful force. Not to mention the cost of training staff on a new package.
Still, customers have to be happy. What happens is that service level agreements become really important, and back-up plans become really important, Correia says.
I know of companies in that space Im not going to name a company where the service is really, really lousy. But the reality was, we talked about moving to another vendor, and [my colleagues] were like Man, ripping this stuff out is painful.
So massive changes are overtaking the software industry, yet the old basics of quality and customer service are still major factors. But a desire to stick with the known and established might be the most powerful force of all.