Does Anyone Buy Software Anymore?: Page 3

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Risk and Tight Budgets

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The rental model changes the business risks in the software industry. “It’s lower risk for the buyer because you have the right to cancel. It’s 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 don’t lose that contract every year.”

Causing a further squeeze: budgets are tight. While the software industry is growing (in fact it’s the fastest growing segment in IT) and the overall tech industry is growing, budgets don’t seem any more flexible.

“People are getting smarter,” she says. “It’s not the end of the ‘90s – there’s 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, “There’s not going to be a winner and a loser,” Correia says. “It’s going to be an evolution rather than a revolution.”

Furthermore, it’s not likely that today’s established vendors – whether they rent or sell or do some combination – are about to disappear.

“There’s 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 data’s out there, it’s hard to rip it out – even if it’s 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 – I’m 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.

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