Alistair Croll just wrote a post over at GigaOM talking about the increasing irrelevance of source code:
For a long time, source code was viewed as a software company’s crown jewels, protected by dongles and complex encryption schemes to prevent copying and theft. In the software-as-a-service world, however, source code becomes irrelevant…If 37 Signals gave me the Basecamp source code for free, I’d still use their service. If Freshbooks burned me a copy of their app, I’d still subscribe to them. Even if Salesforce.com handed me their software, I’d use their hosted portal.
This is *so* true. As he rightly points out, “IT administrators will tell you that the cost of running any application far exceeds its license fees” and this is a big part of why Software as a Service (SaaS) is increasingly appealing.
When you consider the true costs and complexities of ongoing maintenance, release patching, backup management and training (which companies like FreshBooks deliver happily, and with a far deeper knowledge than any IT department ever could), you begin to see the true value of SaaS, and it’s clearly not just the source code.
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10:06 pm
I call B.S. on this one. SaaS can be great but without good code it doesn’t matter how great the service is since what you’re offering will be crap.
As for your argument about expenses, of course there will be expenses but if running Freshbooks wasn’t profitable you wouldn’t be doing it and the same goes for every other company.
Don’t kid yourself, without good coders all of these SaaS wouldn’t have many happy customers.
2:25 am
I second that call of B.S.
SaaS is simply a smart way of earning recurring income. Running and administering well-designed software is, and should be, simple. With many software applications (i.e. for Mac and Win) updates are automatic and free of charge. Even OS’s - infinitely more complex beasts then applications - give you automatic patches, updates, etc, all as part of a one-time fee.
If Basecamp gave ME their source I’d run it on a dedicated server for $100/mo, rebrand it, and sell the service myself…for a monthly fee. If Freshbooks gave me their app for $100, with a years worth of updates for $50, I’d save hundreds!
9:37 am
@blip: don’t get me wrong, you need great coders to even have a chance for your service to matter. Believe me…I believe deeply in the value of great products (design, code, usability), but I also believe deeply in the additional services that SaaS providers offer and how they let the average consumer/business owner focus on their work.
@bleep: The truth is, most people out there are not interested in installing code on a server for their own use. How about the pain of installing updates, and continuous upgrades? No thanks. I pay for a variety of services just so I can avoid having to deal with these things. That may not you interest, but I am willing to pay for my ability to focus.
3:51 pm
I don’t see the pain in installing upgrades and updates. Haven’t you ever used ITunes? Microsoft Windows? With well-designed software it’s a single click of a button or a visit to a web page to download an update.
Would you pay a monthly fee to use Quicktime, Outlook or Excel?
I’d much rather pay for Freshbooks once then pay a monthly fee. Honestly, how much support is really needed for such a simple and intuitive application?
I think it’s clear that the real value of SaaS is only to the provider.
9:41 am
Well, iTunes exists to sell music — it’s an engine for recurring revenue. And calling Windows well-written software is, well, a bit suspect.
Not to mention they don’t offer support unless you cough up extra cash.
If you want to buy a box with software in it, there are plenty of folks out there who will sell you that! It’s simply not what we believe in. We’re in constant contact with our users, we’re constantly updating and improving our service, FreshBooks is very organic in nature. We’re an ever-changing service in an ever-changing world, and we need to justify our relationship with our customers every single month.
It’s a challenge we seem to be meeting, too.
Some folks still don’t see the value of SaaS. Some might not ever see the value of it. That’s a shame, in my opinion. Not too much we can do about it beyond an attempt at discourse, though.