SaaS: The Systems Democratizer
As more people start producing a class of goods or services, the supply side deluge ensures that the price keeps coming down. Lower price creates higher demand but since the supply still outstrips it, the price keeps falling. At the state of equilibrium, the marginal cost of production equals the marginal revenue from a sale. This is economic democratization wherein the supply side ensures greater affordability of a certain good.
In the past decade or so, the same economic principles have held good in the case of software too. At college, we had to go to the lab, program the computer to run linear programing optimizations and go next day to collect the results. All this while there was a queue. Today it is available on the desktop. During an internship with a broking firm when in Business School, I had to book a slot for using the only machine that had Microsoft Office installed in it!
The plummeting price of complicated systems have created the democratization of information systems. This phenomena has ensured that even small and medium businesses benefit from system driven productivity, which was earlier reserved only for the elite giant corporations.
Have we reached the balanced state yet? I guess not. If one looked at the TCO (total cost of ownership) of software systems today, a bulk of the costs are made of hardware, networking, data centers and general software and environment maintenance. These are the items that shall fall prey (in terms of costs) in the next wave of what I choose to call systems democratization.
The catalyst that will lead this phenomena will the Software as a Service (Saas). Its time has come and the precariously posed world facing a recession will accept it with open arms.
Nothing is more powerful than an idea whose time has come…
Technorati Tags: Software as a service, SaaS, TCO, cost of software, information democratization, hosted applications
