It was interesting to read the announcement about Salesforce’s latest price hike which amounted to about 40% here in the UK and about 20% in the US.
Much of the rationale for the increase is based on the additional functionality now built into the product by Salesforce which makes it even more valuable to customers who are using it to support increasingly important business applications.
However those same organisations who rely on the technology to help them run their business could also consider that they are in some way becoming trapped in the subscription model.
There is an argument of course that if they are unhappy or think they the product has become too expensive or lacks functionality, then they do have the ultimate sanction of stopping the subscription and moving on to pastures new.
In the early days of the Software as a Service (SaaS) market one of the advantages suggested for customers was that they would receive better service from vendors because there was always the option of not renewing a subscription.
It was presented that it would be relatively easy to migrate away from them because other than the data, there was little impact in terms of the supporting environment. This was due to the fact that the vendor took care of all that and by and large the customer did not require a large cohort of staff dedicated to running and managing their applications or significant quantities of hardware and other infrastructure.
As SaaS vendors and their partner ecosystems have grown however, and their applications have become more fundamental to their customers’ success the ability to move has become more of a challenge.
This is because the larger and more customised and complex their environment becomes the more difficult, costly and risky it would be to switch platform to a competitive alternative, if one exists or to develop their own system in house.
The same problem would also affect users of SAP, the Oracle packages (eBusiness Suite, Siebel, JD Edwards and PeopleSoft) and others. These customers have traditionally purchased their software on a perpetual licence plus annual support and maintenance basis.
Their implementations of these applications have also often been highly customised to meet particular business needs and so they too would face significant challenges in moving away from their vendor.
In addition it is important to consider that should an organisation decide to change vendors or to develop their own in house solutions there are usually a myriad of integration, analytics, governance and other data related matters to unpick and redo. Applications rarely exist in a vacuum.
The benefits of having a single vendor who can provide the bulk of the information and business process for an organisation is clear. A tightly integrated set of business applications plus technology for Business Intelligence and information management should deliver benefits in terms of faster time to value and the ability for that organisation to be more efficient as well as more proactive in taking advantage of opportunities where they present themselves.
The trade-off of course is the cost, difficulty and risk of migrating to another vendor, almost regardless of how a customer is treated by their incumbent.
Deciding to switch to another vendor and another technology is never going to be a walk in the park and having a good understanding of the application’s underlying data model (metadata) will be an important early step in any migration project. The data will be the real substance of what gets moved from platform A to platform B.
(* From “Hotel California” – Lyrics by Don Henley, Glenn Lewis Frey, Don Felder, Donald Hugh Henley)