Software is a Service

In the world of enterprise IT and high-end business computing, the idea of delivering software as a service is relatively old news. In fact, the acronym SaaS (Software as a Service) is now so commonplace there that you rarely, if ever, see it spelled out anymore. Plus, in that world, everyone is rushing to deliver everything as a service—in fact, the new buzzword is “XaaS,” where “x” is like an algebraic variable that can seemingly represent anything.

In the world of consumer and small business, however, the concept of software being delivered as a service is still relatively new. Many people are just starting to get their heads around things like Microsoft’s Office 365, which provides end users with access to popular Office applications like Word, Excel and PowerPoint. By paying an annual subscription fee, Office 365 not only allows you to get these key applications on your main PC, it also lets you access them on multiple PCs in a household. Plus, when upgrades come out, you get automatic access to those new versions—it’s all part of the package.

On top of that, you can now gain access to these apps on multiple devices, even across different operating systems, which is a new twist on traditional SaaS. In this era of multiple devices per person, this is extremely important, because people need to exist across multiple operating systems and expect to be able to get things done no matter which device they happen to be using.

Another offering along these lines is the newly unveiled 2015 release of Adobe’s Creative Cloud, which is designed for creative professionals and offers access to Photoshop, Illustrator, DreamWeaver (for website creation and editing) and much more. Like Office 365, Creative Cloud offers a variety of different subscription price models, each of which give you access to the latest versions of Adobe’s key applications across different operating systems on different machines. The new version of Creative Cloud also provides easy (though not free) access to Adobe Stock, a new stock photo and clip art library service.

In a similar way, Office 365 has moved well beyond the limits of its core apps and moved into online e-mail, calendar, file storage and even business communications with Skype. It seems the business model for both Microsoft and Adobe has evolved from “software as a service” to “software is a service” because of all the additional capabilities now available.

And it’s not just these business software mainstays that are adapting this approach. Many of Apple’s latest software offerings are essentially being turned into services. Certainly the forthcoming Apple Music is a good example, but even Apple’s operating systems (OS X for Macs and iOS for iPhones and iPads) and all the apps that the company bundles with them (iCloud, Pages, Photos, GarageBand, etc.) have become more like services than independent software.[pullquote]More and more of the things we want to do, the information we want to gather, and the means of communicating with others are becoming services that are embedded into different platforms. “[/pullquote]

In Apple’s case, these software updates are now free (as are many, many other web-based applications), but the idea is that underlying software is being subsumed into the greater purpose of delivering a set of capabilities that can be more easily kept up-to-date. It’s not just about a different business model for delivering software, it’s also about a different way of providing key functionality.

Taking this analogy to an even higher level, you could even start to argue that independent applications, both on PCs and mobile devices, have started to go away. More and more of the things we want to do, the information we want to gather, and the means of communicating with others are becoming services that are embedded into different platforms. As with previous examples, some of these services are independent of the underlying operating system while others are becoming increasingly embedded into it.

The really tangible benefits of these software service models hit home recently as I was setting up some new PCs. After ensuring that I had the latest Windows Updates, all I had to do was enable my Office 365 and Creative Cloud accounts on each of them. Not only did this start the process of installing the latest versions of my core applications, it also gave me cloud-based access to all the documents I create in each of them. Microsoft delivers these documents through OneDrive and Adobe through their own CreativeSync, but regardless, the whole process was significantly easier and faster than the traditional way of installing an app at a time, then updating all those apps, then making sure I had all the files I needed, etc.

The likelihood that we will all continue to add to both the quantity and variety of our smart connected computing device collections is extremely high, so the value of these new software services cannot be overstated. By giving us the tools we need across the devices we use, they really can make the process of using all our different devices much easier.

Published by

Bob O'Donnell

Bob O’Donnell is the president and chief analyst of TECHnalysis Research, LLC a technology consulting and market research firm that provides strategic consulting and market research services to the technology industry and professional financial community. You can follow him on Twitter @bobodtech.

19 thoughts on “Software is a Service”

  1. When software companies modify their legacy software to use a service they need to be mindful that they are creating a distinct service and not merely moving customers to the subscription model.

    I used to be a loyal customer of Office till Apple bundled Pages with new Macs for free. Pages can read Word files and convert to PDF for the wide distribution and its editing capabilities are good enough for a simple stuff I do. I do rest of my editing in free HTML editors. I see no value in Office anymore for home. May be less so for work.
    There are plenty of free online storage options as well. I realize that privacy and security may become an issue with free models, so this is what people will pay for in subscription models.

    It is like in Middle Ages the cities used to charge a duty for everyone entering a city and later abandoned it. We still pay for it via municipal and sales taxes, but the model has changed.

    I think a software will eventually become a low cost if not free utility, which we will pay for with our taxes.

    1. Yes, there are a number of important implications in this evolution from stand-alone software to software as services. As you point out, there are important economic ones, but there are also important differences in usage, expectations, etc.

  2. In the case of Adobe Creative Cloud, the benefits are very obvious. For a reasonable price (like 1/4 the price of buying just a single version of Photoshop), you can get to use the whole suite for a year. That in my opinion is amazing value.

    Futhermore, you can download previous versions of each application in case there are bugs or compatibility issues, which is great when your business depends on these apps.

    It seems that first, there must be value in these apps so people are willing to pay a certain price in the first place. If you have that, you can add a lot of cloud-only features beyond simple storage, that greatly expand the experience for customers.

    I certainly appreciate this approach.

  3. Isn’t “Cloud” the new name for “SaaS” which itself was the modernized version of client-server computing ?
    I’m always a bit confused as to whether the terms refer mostly to the technology (fat client vs thin client vs no client/web-based) or the billing mode (purchase vs rent). The confusion about how many devices, users, updates, GB of storage, … are included is just icing on the cake. And it combines with Mobile OSes focus on per-account instead of per-device billing (though there a a few apps that are sold per-device, still, even on Android), and modern OSes pushing app updates in a much more proactive and friendly way than the patch/upgrades of yore. Also, on Mobile, new OS and Apps versions are free, which didn’t use to be the case, and is a bit surprising.

    Anyhow. I’m not a fan of my data and apps being unavailable when there’s no data connexion, nor of having to rent apps or content because over time it usually turns out a lot more expensive than owning it ?
    I do think rents are nice for devs, they can increase revenue and make it more regular. I’d argue paid updates/upgrades for apps and OSes would make sense too, I think Mobile hasn’t acted on that yet because of explosive growth, but it’ll pop up at some point. I certainly prefer paying for an occasional upgrade to paying rent.

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