Caught in the Middle: Subscription Software

pay-button-on-keyboard-630x300Software Subscriptions can feel like a vampire. They lurk on your OpEx ledger, claiming a value proposition for each month, hour or mile you use them. Gone are the opportunities to squeeze extra value beyond the design intent of the software. You can’t stop paying for them in a slow cash-flow month if you still need to use them. That feeling that you “don’t own” anything starts to sink in. The fear that if you leave it will cost more to find something new starts to materialize. Hiding under your desk sounds like a good idea.

Welcome to the new age of Subscription software. It’s everywhere now. It’s not going away either. Here’s why:

Customer loyalty is only skin deep

In hopes we would spend lots of money with them, software companies often gave deep discounts to get us in. In many cases, these investments would be the last time the customer spent money with the software company for years. It took a lot of customers paying a negotiated rate for software to make a profit. Remember that the people that code these solutions routinely capture $100k/year+ salaries and executives many more times as much. Add on to that the need to have a sales force in the first place (which isn’t cheap either) and you have a steep mountain to climb to profitability as a software company.

Pirating

It’s easy to pirate software that’s perpetual and use it for as long as you please. Just ask Adobe, AutoDesk and Microsoft. It was so bad, that to combat it, they created the Business Software Alliance to go around and threaten to sue companies in high risk verticals if they didn’t submit to an audit. Many Mid-Sized and Small companies were audited and most were found to be out of compliance to some degree, though it’s unclear as to how bad it really was.

Upgrades aren’t always enticing

Many software companies would charge about 2/3 the original cost of the software to ‘upgrade’ to the latest version. Some could justify the cost if the value proposition (new features, typically) meshed with their business. Smaller businesses learned that they could skip versions or never upgrade and be fine. This meant that a new release might only capture a small percentage of existing customers. If it didn’t entice new customers, the new release could be a complete flop. Software companies learned that this was not working consistently. After investing sometimes millions in a new release, new revenues from it might only be a fraction of that.

Support costs are high

All software depends on other software for it’s reliability (Operating Systems, Drivers, Databases, etc.) When there are at least as many deployments of your software as you have customers, the cost of support goes up. One of the primary reasons is because each deployment has it’s own set of risks and potential for supporting software to have issues. In most cases, you’re left holding the bag as a software company to prove to the customer that the issue isn’t your software. In major cases where a supporting piece of software takes your software down, you as a software company typically have to release a fix at your own cost. It can get expensive fast.

Agile Emerged

Some very smart folks came up with a manifesto for developing software better. Known as the Agile Manifesto, it dictated, among other things, that software companies release new versions all the time with minimal bug fixes, features and little to no upgrade labor on part of the customer. Software companies who started into Agile quickly realized they produced a higher quality product as a result. Since no customer is going to pay for an upgrade that includes only minor new features or bug fixes, it didn’t take long for early Agile adopters to completely abandon perpetual licensing.

What can be done?

Software companies are trying to improve their businesses just like everyone else to be relevant into the future. Your job now as a Business Manager, CIO, CTO or CEO is to evaluate how you will manage this transition to “Pay as you Go”.

Communicate with software vendors

Find out what your software vendors intend to do in the future. Are they moving to a subscription model? What’s their roadmap? What will it cost? What’s their emerging value proposition? The worst thing you can do is sit idle and wait for things to happen.

Plan on a hybrid environment for a long time

Some of the perpetual software you have in your datacenter now probably has no subscription based replacement yet. Plan on maintaining these applications using as much virtualization as possible – even cloud based virtualization if it pencils out (note: it doesn’t always make sense to virtualize in the cloud).

Hire a Business Technology Consultant

Since your IT consultant isn’t going to be doing much for you anymore, it’s time to find a good Business Technology consultant to help out. A Business Technology consultant is going to help bring new systems in and manage them with you under this new model. A good Business Technology consultant should specialize in your particular line of business. Most of what they are going to be doing is matching technology, workflows and process to your business – not adding equipment to your server room.

Shift your technology spending

Take a look at your budgets and accounting classifications of technology spending. Most of what you will spend on technology in the future is pure OpEx – very little will still qualify as CapEx. Check with your Business Technology and Accounting professionals to adjust you’ve got your books and budgets to correctly accommodate this shift.

 

 

Business Technology

how-to-maintain-technology-in-your-businessYesterday, we called it “Information Technology.” It was a department of talented engineers and managers that could get the infrastructure in place and got really good at procuring the tools to ride on top of that infrastructure.

Today, IT is still important in larger organizations and industries who aren’t well served by mobile and consumerist cloud services. Fewer companies are investing in Information Technology the way they did 10 years or even 5 years ago.

Information Technology is quickly being replaced with Business Technology.

What is Business Technology? There are a few definitions out there that are fine, but I see it as this:

Business Technology is the combination of Information Technology and Business Practice into a single, holistic functioning mechanism that leverages the technology for achieving business goals directly.

In practical terms, it’s often the re-education of IT into BT. The world no longer needs shops of infrastructure experts – more and more infrastructure is headed to the cloud as shared services. Instead, it needs troubleshooters, analysts, project managers, trainers and a host of other roles to support the shift to less centralized and more democratized technology.

How businesses old and new interface and leverage technology is as chaotic and vulnerable as ever, despite continuous advances and improvements in much of the software and services available today. I fully expect that we will continue to observe companies make both disastrous and successful shifts into the Business Technology framework.

As you plan for 2017, it’s time to start thinking about how your business will transition to Business Technology from Information Technology.

Organization in a Google World

foldersIn the era of Google Searches, Minimalism, Social Media and Apps-for-Everything, folks are less inclined to implement good old organizational skills with their data. Why bother? After all, we can Google anything we need. We can re-download that app when we get a replacement phone. I can go on Instagram and see my photos.

Organization, admittedly, has changed a lot. Gone are the days of meticulous maintaining of file cabinets with folders full of critical documents for everything. We can scan those same important documents and keep them electronically and save all that paper and storage space.

Still, there’s plenty of reasons to keep your digital world organized. While you can put just about everything in the cloud and let the cloud keep things organized, it’s not great to rely on it. Sure, you can expect most cloud services that are popular and sustainable to stick around and continue to serve you. Until they don’t anymore. At that point, your data and convenience having the machine manage it for you are gone.

Much of my business involves helping clients extract maximum value from their data while ensuring it is accessible beyond the life of the cloud services and storage solutions they currently rely on. Value can be sentimental or financial – both are valuable. To lose it would be detrimental.

So here’s my formula for ensuring digital continuity that I take my clients through:

Establish a Digital Filing System

It doesn’t have to be detailed – in fact, the simpler the better. Keep file versions of all your important data. Digital files and folders are cross platform and continue to hard coded into every computer system in existence for a good reason – it’s reliable and a known quantity. As Operating Systems, Clouds and other technologies advance, the old reliable file and folder structure remains core to all of it.

Back up your Filing System

Keep that filing system backed up in multiple locations using multiple, independent backup solutions. If one fails (or goes out of business), you still have the others to rely on. Having a mix of external hard drives, cloud services and even on-premise servers are a great way to ensure your data will never disappear.

Sync your Clouds to your Filing System

Not every cloud provider can give you your data in a file format. Beware when this is the case. If you can’t get your data out of the cloud, you’re locked into that cloud and that provider is holding your data hostage. That’s not acceptable for any reason. If you’re not able to export your data to files, move on to a cloud provider that lets you export all your data to files.

Keep Read-Only Archives

Most of your data isn’t going to change over time, so it makes sense to archive the important bits to a read-only archive to avoid accidental changes to the data. Over time, dispose of the archives that are no longer of value (particularly the ones that could be a liability such as old financial records or building drawings).

The Innovation via Automation Cycle

2016-09-04_10-20-12Technological innovation is often described as happening in “leaps and bounds.” As cliche as it sounds, it remains accurate through a significant cross section of technological advancements. Beyond the simplicity of this cliche exists an opportunity for businesses to get ahead in their objectives using automation.

Innovations are temporary solutions

Innovations in computing are making their way into the mainstream at an impressive rate. The most important and significant of these innovations often started their lives as solutions to problems created by previous innovations. By virtue of this, it is assumed then that all innovations run the very likely risk of being temporary until a new innovation comes about to supplant it.

Few innovations are brilliant ideas that materialized from nothing. Most are incremental exercises in problem solving, discovery and good old trial and error. One of the most powerful tools available to work with to accomplish this in computing is automation. Most added value tools (API’s, Queryable Databases, Feature Extensions, etc.) are costly to leverage and rarely return value at a small scale. In contrast, automation is typically available across a broad spectrum of solutions and in flavors that are more accessible and yield results at a more affordable rate.

Amplifying the value of an innovation through automation

Automation is often the first and easiest way that operations can begin exploiting an innovation to discover new value by removing additional human or machine effort, cost and complexity. This is true for businesses of all shapes and sizes. The challenge that is presented is one of what to automate, at what cost and what benefit to the business.

Some years ago, before the introduction of Group Policy by Microsoft, I created a series of scripts over the course of 30 hours that would manage critical Windows Settings, deploy software and perform routine maintenance on desktop computers. I calculated that this automation saved my company 400-500 hours of IT labor over the next 2 years. Instead of a technician running around to each station to handle these tasks, the scripting system handled it for me. Later, I added logging and reporting so I could perform analysis to see where the scripts weren’t working and make adjustments.

Normalizing the benefits of automation

Once an innovation has been successfully automated, it demonstrates the innovation’s value at scale. This leads to the inevitable consolidation and optimization of the combined original innovation, automation and new thinking that comes with it.

In my scripted Windows desktop management example, eventually Microsoft finally got Group Policy right. Once the new Group Policy technology was mature enough, I transitioned my scripts over to GPO. Over time, I would add new policies to GPO that would enhance user productivity and continue to save on the potential IT labor that the feature introduced. It also made it easier for other administrators to come in and help out with policy changes and management.

Innovating in your business before tech does it for you

It’s important to understand that many innovations that found their way into the mainstream started out as an automation project in the operations of the organizations determined to make the most of their investments and gain competitive advantage.  I’m not trying to suggest that automation is the only way to drive innovation – it’s not – it is, however, something that is accessible to your business and has a fantastic track record of success.

Organizations that leveraged some form of automation in their operations to create value before it was consolidated into commercially available products held an untouchable competitive advantage for a time. It takes an entrepreneurial mindset and technical acuity to successfully innovate within your operations. Before you dismiss the possibilities of what your operations could be doing, it’s worth it to dream a little and challenge your technology specialists to participate and deliver.

I get to do this every day in my consulting practice for my customers. We have created many automated solutions before they were commercially available – from real-time BIM Collaboration Platforms to on-demand Image Scaling solutions within web applications. Automation is a powerful tool in today’s app-economy that seems to have a solution for everyone. Why? Simply put – when everyone has the same solution, the playing field is leveled. Your ability to add value over your competition is marginalized. By using automation to bring new value to your business proposition, you position your firm to deliver better design, higher quality services and an unmatched experience for your customer.

Security needs a plan B

IMG_2510Passwords are a pain. Even when armed with a great password manager like LastPass, you still have to manage sometimes hundreds of passwords at a time. While infrequent, there are occasions where you need a Plan B to get into your account in case something goes wrong. LastPass has an Emergency Access feature that, after a waiting period, allows a trusted third party to gain access to your account in the event that something happens to you or you lose access to your email and phone number.

There’s no question that the old username/password authentication scheme is outdated and a huge pain for users. When looking at new ways to authenticate us to our apps, there are some great ideas out there. Let’s consider Copper for a moment. They have created a platform that’s easy enough to use that turns your mobile phone into your authentication means. It does this by sending you a text message each time you use the authentication and the site or app you are accessing requests that you punch in your one time access code. This is a great means to validate that you are who you say you are.

But. And it’s a big But.

What happens if you suddenly need a new mobile number and no longer have access to the old one? Copper says to this:

“We don’t currently have an ability to transfer accounts. There are some thorny security issues to work through. We think about it from time to time so watch this space.”

What happens if your mobile is lost or stolen? Again, Copper says to this:

“We don’t yet have a good way to allow users to block or lock their Copper account temporarily—we know that we need to build that capability, and it’s on our roadmap as we iterate on this first version of the product.”

Rats! This is a dead end for this authentication technology, unfortunately. Without a Plan B – this authentication solution will fail to serve users with the recovery options they need when things don’t go according to plan.

Too bad – I really hate passwords.