It has been happening for some time now, but it really hit me when I saw the recent announcement from Adobe that they would no longer sell copies of their Creative Suite products. Instead, all such products will now be available by subscription only and will run ‘in the cloud’.
Currently, a basic version of the Creative Suite would cost around $1400. And once you bought that you could use it forever. Nothing came with that, you had to install it on your machine and you had to provide your own storage for the things you ‘created’ and eventually you would upgrade, but the up side is that once you paid the price you were free and clear.
Under the new rules, subscriptions to a single seat of Creative Suite will start at $49.99 a month. You can do the math as well as I can; if you kept your purchased copy for two and a half years, you would start to come out on top. And on the surface, that may seem like an acceptable trade off.
I am biased, of course. I don’t like knowing that I have to money up each month forever to use anything. I do it for cable TV and lots of other things but I don’t like it. And there are a couple of problems with the ‘I can get it for pittance a month’ philosophy.
For example, probably very few people will use the $49.99 plan. Why? Because it comes with only 20 Gig of storage and using Creative Suite you can burn that up that pretty quickly. So, most people will probably have to go with a more expensive plan, thus increasing the likelihood that you will end up spending more, perhaps much more over the lifetime of the software with this cloud model than you would with purchased.
Now I know that most of us in the i world do not use Creative Suite. So why am I bringing it up? Simply because that switch is an example of a change that is occurring across the industry, the move from purchasing software to having a subscription, all done under the guise of cloud computing.
Although we are used to yearly fixed costs with the i, in the past there have been many software costs that we could bundle under a capital project request and then be done with them. It looks like in the future, more and more of an IT budget will be going to fixed costs that cannot be reduced without kissing those products and services goodbye.
You can, of course argue about whether having a fixed budget is good or bad. On the one hand, after a few years you can end up with a sizeable budget that cannot be manipulated or changed without dropping the services (software products) associated with those costs. I don’t like not having flexibility, plus, if cable TV has taught us anything it is that a subscription price never stays where it starts. It always goes up. It has to in order for the vendor to make even more profit next year.
On the other hand, having a fixed budget can be kind of a safe harbor for the harried CIO. Want to cut my budget? OK, what software products (supporting which user departments) do we want to do without? The downside of it is that it does leave manpower as the one area that can be cut without losing services and most departments have few enough people now.
So, what can you do? Certainly, cloud computing and subscription based services are not going to go away. And Adobe isn’t the only one who will replace unit sales with cloud only subscriptions. It is really the only way that these companies can continue to generate increased revenue. And when you get right down to it, that is what business today is all about. It’s not about making a respectable profit year after year, it’s about having your profit climb ridiculously year after year. And most people will knuckle under and follow the crowd. It’s just part of the cost of doing business, you know.
At the very least, however, we should begin to watch very carefully the growth of these monthly subscription fees because they are going to add up to some serious money. $49 here, $79 there, etc. Companies need to look at what impact picking up this service will have. And more importantly, if you run on hard times and need to dump some services, what will the impact of that be (since it would mean losing that software and possibly all of your data that is on their servers) on your ability to function.
Finally, it means that we, even we in the i world, need to keep a close eye on open source software that can do the same job. Yes, it may not have all of the features of the subscription services but as some of these subscription products mature and new enhancements become more esoteric and peripheral to the central task they are performing, open source may make good, good sense.
In the end, it comes down to budget flexibility. How much of your budget do you want dedicated to fixed cost subscriptions, and how much do you want to have the ability to control? In a world that is increasingly trying to tie you into regular monthly payments, how can you maintain your independence and flexibility?