Software companies continue to try and develop new features
and functions that compel a company or person to buy it. Microsoft is a classic example of this as the
company attempts to enhance its core products every 3 – 4 years (or more in
some cases) incorporating features that drives people to buy its software. The problem is most people don’t need any
more features than Office 2003 and XP – these versions offer more functionality
than what 95% of the population needs.
Most people want stable, reliable, and fast software products that do
what they want it to do – no more. This
opens the door for many free or inexpensive office alternatives. Why spend $400 – $500 for Office 2007 when
Open Office, Google Apps, Zoho, etc are free or virtually free? As these products become easier to use, offer
more functionality, and easily integrate with Microsoft’s Office files, more
and more businesses will switch to these more cost effective solutions.
Nicholas Carr has written extensively about IT and its
effectiveness. He claims IT no longer
provides competitive advantage and is simply the cost of doing business. He likens IT to electricity – it’s a utility
that every business needs and software is maturing to the point where many businesses
have a hard time differentiating like software products. There is a maturity cycle software follows –
early adopters through laggards. By the time
laggards adopt applications it is a proven, stable, and provides the
functionality most companies need to run their business. At that point, it is very difficult for
software companies to grow of even maintain revenue for these products.
Mature software categories are ripe for delivery as a
service. On-demand/Software as a Service
applications don’t have all the overhead of their on-premise counter parts and
therefore can be delivered at a fraction of the cost. Since most companies are comfortable with these
applications, they are open to solutions that are significantly less expensive –
sounds a lot like a commodity. No one
wants their products commoditized, but the reality is most businesses have a
hard time distinguishing one company’s product from another.