It’s not about the software, it’s about the service

April 18, 2008

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 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.

about the author

Co-Founder & CEO, FreshBooks Mike is the co-founder and CEO of FreshBooks, the world’s #1 cloud accounting software for self-employed professionals. Built in 2003 after he accidentally saved over an invoice, Mike spent 3.5 years growing FreshBooks from his parents’ basement. Since then, over 10 million people have used FreshBooks to save time billing, and collect billions of dollars. A lover of the outdoors, Mike has been bitten so many times it’s rumored he’s the first human to have developed immunity to mosquitoes.