Pay-per-use model relieves pressure of buying costly programs
By Daniel Ng
FOUR in 10 computers in Singapore are running pirated software, according to a recent survey by industry watchdog, Business Software Alliance (BSA). And this is happening despite a tougher Copyright Act, awareness campaigns on intellectual property and adverse publicity for companies found guilty of using illegal software.
Even more startling is the forecast that it could take another four, possibly five, years before we see illegal softwareuse in Singapore move closer to three in 10 computers.
The IT world is iconoclastic, one of accelerated change and often defying traditional business conventions. Is it possible then that piracy in this new world requires an equally new world solution? Are we trying to solve a new-world challenge with an old-world mindset?
Many businesses, especially small and medium-sized firms, readily acknowledge the need to embrace information technology but find the cost of owning it prohibitively expensive.
Unwilling to consume capital on hundreds or thousands of copies of the same software, some businesses enter into labyrinthine negotiations on software prices based on rights of usage and on categorising employees as task-based or knowledgebased workers.
Others do not even attempt to negotiate a cheaper way of running software legally. They simply resort to illegal copies.
The advent of broadband networks as well as developments in seamless cross-platform connectivity via the Internet create the right environment for a new-world solution that will give business owners what they want — software they can use but not own.
The long-promised utility model of delivering software implemented by application services providers (ASPs) needs to be revisited. While in the past, accessing information at glacial response times over networks made the ASP model unthinkable, today, the Internet and broadband networks make it viable.
The current model of buying software and incurring capital expenditure with no measure of how efficiently that software will be used, or of how that investment might be maximised, leaves businesses vulnerable to an uncontrolled and unmanageable expense.
Accessing software on a pay-per-use basis, on the other hand, transforms a depreciating capex (capital expense) item to a controllable opex (operating expense). In this model, businesses know exactly what they get for what they pay, not unlike telecommunications or utilities costs.
Pay-per-use gives control back to business owners and if the customer is truly king, then surely that is where it belongs.
More importantly, the model answers a common business refrain to use and not have to own software.
The simplicity of pay-per-use eliminates the need for tedious negotiations over rights of use. It enables businesses to stay focused on their core competence, leaving the task of managing IT resources to the experts.
Pay-per-use removes an oft-cited reason businesses run the risk of using pirated software — the heavy upfront costs of purchasing original software.
The utility model of selling software is technologically feasible today but it presents a challenge to the decades-old, sometimes monopolistic way software vendors have dealt with their customers.
Perhaps the time is right to change the status quo.
If whistle-blowers in Singapore have 20,000 reasons to become BSA informants, software vendors who make up the BSA have at least 20 times 20,000 reasons to introduce software on a pay-per-use basis to the business community here.
The writer has been in the ICT industry for 22 years and has served many multinational companies.
(Source : Copyright 2006 MediaCorp Press Ltd. Article first appeared in TODAY, Tuesday, June 6, 2006)