Renting Software
The life expectancy of software, especially purchased software, has become shorter and shorter over the years. While in the past an organization could be on the cutting edge of technology for five or six years with the software it had, now some applications become obsolete within two or three years. If you personally want to use the most current application, such as word processors and spreadsheets, you must pay several tens or hundreds of dollars to upgrade your version every two or three years. Now imagine how much money organizations have to pay for the same privilege for hundreds of thousands of employees. Worse, unlike households and small firms, many organizations spend millions of dollars on enterprise-wide applications, such as supply-chain management, ERP, and Web-based transaction systems only to find that two or three years later their version is old and lags behind the newer versions that their competitors use. Also, for small companies, the cost of even a single module of an enterprise-wide system may be too high for purchasing. They prefer a monthly payment to a single, but large allocation of capital for the software.
The answer to these challenges may be a relatively new approach to acquiring applications – renting. There are two approaches to renting: in one, the organization pays for the use of an application over a limited period of time at its site; in the other, the organization pays to use the application through the web.
On-site Renting
Many IS executives would rather rent software for a limited period of time and pay less than own it for a much higher cost. To satisfy this need, many software vendors now offer rental programs. For example, many organizations rent antivirus software rather than purchase it. Network Associates, Inc., the company that owns the popular McAfee antivirus software offers rental contracts for limited periods, as short as one year. The company realized that since thousands of new computer viruses are launched every years, its customers prefer to rent a version of the application for only one year, and when the next version, which takes care of new virus, is available, rent the newer version.
When a company rents software, the rental rate is determined by the number of users and the period for which the software is rented. At the end of that period, the company must delete all copies of the software from its computers, or renew the rental agreement.
In the fall of 2001, business software pioneer Thomas M. Siebel was giddy as he looked ahead. Sure, the recession was hurting. But he claimed his company, Siebel Systems Inc. -- the leader in software for managing sales forces and customer-service departments -- would be more resilient than its competitors. ``Everybody is going to be naked,'' Siebel said with relish. ``We're going to find out who are the dilettantes. We're going to find out who are the scumbags, and who are the sleazeballs. Everybody is going to be exposed for who they are. It's going to be a remarkable time.'' Two months later, he confidently predicted that the high-tech downturn was about to end. He could be certain, he said, because of the forecasting capabilities in his own software. Well, both Tom Siebel and his software get failing grades for prognostication. The tech industry is still mired in slow growth, and Siebel Systems, software's highest flier in the go-go '90s, has tumbled farther than its ``dilettante'' rivals. Revenues last year tumbled 22%, to $1.6 billion, compared with a drop of only 2% for the overall corporate-applications-software industry. In the first quarter, Siebel's revenues dropped 30%, to $333 million. Siebel's stock price, at $8.50, is off a staggering 94% from its peak in 2000 of $119. It wasn't just the economy that hobbled Siebel Systems. A 2001 product upgrade was so difficult to install that customers were reluctant to buy it. The company's reputation suffered from bad publicity about its customer-satisfaction record. And it lost ground to corporate-applications leader SAP. In 2002, Siebel Systems' share of the customer-management market it helped pioneer slipped from 29% to 23%, according to Gartner Dataquest. No. 2 SAP gained ...
International Business Machines, or IBM, saw this trend and moved their company away from hardware and into software and services, following the money. It is because IBM is so adaptive that it has lasted for over a hundred years. IBM is constantly evolving, growing, and changing.
Some challenges are business related. Many software suppliers use non-standard software to "lock in” vendors - i.e. make it difficult to migrate their data to a competitor. Business models that are predicated on historical service delivery models, such as face-to-face, fee-for-service consultations often penalize remote service delivery.
Hardware, software, support and maintenance costs grow each year with multiple systems in each local region running different types of software and hardware. The application and hardware support teams are larger than could be possible with one integrated solution.
A Worldwide Problem Software piracy is defined as the illegal copying of software for commercial or personal gain. Software companies have tried many methods to prevent piracy, with varying degrees of success. Several agencies like the Software Publishers Association and the Business Software Alliance have been formed to combat both worldwide and domestic piracy. Software piracy is an unresolved, worldwide problem, costing millions of dollars in lost revenue. Software companies have used many different copy protection schemes. The most annoying form of copy protection is the use of a key disk. This type of copy protection requires the user to insert the original disk every time the program is run. It can be quite difficult to keep up with disks that are years old. The most common technique of copy protection requires the user to look up a word or phrase in the program's manual. This method is less annoying than other forms of copy protection, but it can be a nuisance having to locate the manual every time. Software pirates usually have no trouble "cracking" the program, which permanently removes the copy protection. After the invention of CD-ROM, which until lately was uncopyable, most software companies stopped placing copy protection in their programs. Instead, the companies are trying new methods of disc impression. 3M recently developed a new technology of disc impression which allows companies to imprint an image on the read side of a CD-ROM. This technology would not prevent pirates from copying the CD, but it would make a "bootleg" copy differ from the original and make the copy traceable by law enforcement officials (Estes 89). Sometimes, when a person uses a pirated program, there is a "virus" attached to the program. Viruses are self-replicating programs that, when activated, can damage a computer. These viruses are most commonly found on pirated computer games, placed there by some malignant computer programmer. In his January 1993 article, Chris O' Malley points out that if piracy was wiped out viruses would eventually disappear (O' Malley 60). There are ways that a thrifty consumer can save money on software without resorting to piracy. Computer companies often offer discounts on new software if a person has previously purchased an earlier version of the software. Competition between companies also drives prices low and keeps the number of pirated copies down (Morgan 45). People eventually tire or outgrow their software and decide to sell it.
Microsoft was able in the OS segment to double their revenue per PC when Windows 3.x emerged which still needed MS-DOS to run. Most of the sales Microsoft made were to OEMs who would take the additional step of installing Windows on a computer’s hard drive. This strategy was effective in that the cost of production was relatively low, as an OEM may only need a single master copy to do the installation. The costs to Microsoft would largely be bore in R&D expense rather than production. As part of the Microsoft business model for this segment, Microsoft designed their OS to need periodic upgrades. The upgrades did come at a cost, and in essence, Microsoft was able to create an “annuity” stream for the Microsoft OS segment. In this segment, Microsoft had a monopolistic structure that allowed them to realize huge returns, especially during such a period of technological growth and rapid obsol...
To further shore up his "IT as commodity" theory, Carr cites the fact that major technology vendors, such as Microsoft and IBM, are positioning themselves as "IT utilities," companies that control the provision of business applications over "the grid." Couple this IT-as-utility trend with the rapidly decreasing cost of processing power, data storage and transmission, and even the most "cutting-edge IT capabilities quickly become available to all."
...d run with it to fund their own deals and charging them a technology licensing fee for it. Now is a full service and actively managed solution highly scalable? Would love to hear your insight.
and distributing it or installing more than one copy of one piece of software on
... distributors whatsoever since they already bought the rights. So how would that make these rental shops different from the regular people who bought DVDs and decided to make copies to give it away for free, even just to upgrade it to Blu-ray so that he could play it on his new player? Nothing, because they already bought the rights to the material and it gives them the right to do whatever they want as long as they do not claim it as their own work.
Computer software and files are no different from artistic products, as their creation also involves a great deal of thought and effort. The laws of copyright cover software. As it takes a great deal of money, skill, time and effort to produce and maintain application software, copyright also protects the large monetary investment made by the software company. The main problems found with software items are the ease of copying and difficulty of detecting breaches of copyright.
Smith, PHD (an associate professor of economics at the Graziadio School of Business and Management at Pepperdine University), 6% of data losses is the result of software corruption and 40% is due to hardware failure. So what does this have to do with using up-to-date technology? Choosing to save money today by using unsupported software and outdated hardware are primary reasons for software corruption and hardware failure. Even more, there’s nothing more frustrating than losing data or having a hardware failure that brings employees to a grinding halt and negatively impacts
The consumer can use the middleman’s equipment to develop his own program and deliver it to the users through internet and servers.
Keeping up with technology is difficult, tiresome, and firms find it very costly to keep at pace with it. Technology rapidly and constantly keeps on changing. Being at par technologically requires extensive research and strategic analysis of acquiring new innovation. Enforcing new technology requires staff retraining and in some cases making employees redundant.
The cost of the hardware and software itself is very pricey, along with the upgrades that it costs to keep it running. If a growing small business wants to change from a computer file-based system to a database system, it must be converted. This is a difficult task and time consuming, because you will have to hire a database designer, system designer and application programmers, and since a database management system should not be taken lightly, it is important to hire professionals that will do it right. After creating it, it is important to teach staff members how to use it, which will require time and more money. They will have to learn about programming, application development and database administration. It will also cost a company more money to pay people to handle the database management system. This will include a database administrator and application programmers, which are trained professionals which require a hefty