Magazine article CRM Magazine

When Disruption Is Good: Subscription Services Lead the Business Revival

Magazine article CRM Magazine

When Disruption Is Good: Subscription Services Lead the Business Revival

Article excerpt

THE YEAR 2012 begins the big disruption, re-energizing the global economy, with its epicenter in enterprise software. All of the pieces and parts are in place, like a giant interstellar dust cloud slowly forming a star under the pressure of its own gravity. There is money available, the need for a massive IT swap-out, and the will to improve corporate competitiveness. These drivers will act as a very targeted and effective stimulus program. Let's look at the available facts.

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It has been nearly a year since President Obama addressed the U.S. Chamber of Commerce and noted that U.S. corporations were sitting on $1.93 trillion in cash and other liquid assets. He was quoting a story in the Wall Street Journal, which appeared under the headline "Companies Cling to Cash." That number itself has not changed much, but what has changed is the realization that the economy, laboring under a credit crunch, is evolving toward more subscription services.

Subscriptions make it possible to continue doing business at a time when credit is tight and people and companies lack the necessary cash for big purchases. They are a form of vendor financing, and they are gaining popularity in all parts of the economy.

Subscriptions are the proverbial straw that breaks the camel's back. Aging and expensive ERP systems are not equipped to handle subscriptions and this fact, combined with high operating costs accumulated by systems well past their sell-by dates, signals the big disruption.

According to a ZDNet article by Larry Dignan, Peter Sondergaard, vice president of research for Gartner, said this past fall that the strategies of IBM, HP, Oracle, SAP, Microsoft, and Cisco--old standbys for enterprise tech buyers--should be viewed as "long-term risky." Going forward, Dignan continued, these vendors should be judged on how they embrace mobile, social, and cloud. Apple and Google will be disruptive enterprise vendors. You'll buy from all of them.

But the major ERP vendors--SAP, Oracle, Microsoft--all have invested heavily in light, efficient, and cost-effective cloud technologies that they are aggressively bringing to market. So have newer vendors who lack the baggage of conventional computing, including Workday, NetSuite, and Zuora, all of which offer solutions more in tune with the new and evolving marketplace. …

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