Skip to main content

Software Subscription Models have Upset the Status Quo

While software-as-a-service solutions change the way that business technology is being used within the enterprise, legacy IT vendors are scrambling to evolve and rationalize their product portfolios -- relative to the emergence of nimble new players that apply very different business models.

According to the latest worldwide market study by Technology Business Research (TBR), software providers that also have hardware portfolios are implementing flexible delivery models, and now they're marketing the implied value of their unified and optimized product portfolios.

"We are seeing vendors embrace their inherent strengths, as large multi-line vendors integrate products to control more of the stack, while smaller pure plays leverage a deeper niche focus," said Meaghan McGrath, analyst at TBR.

Remaining Market Development Challenges

These actions indicate that some go-to-market issues still remain, as traditional software vendors look to maximize the monetization of their existing portfolios amid business user consumption transitions.

The shift of applications software to a subscription model has been a more rapid migration than in the infrastructure management (IM) space, which TBR attributes to the less complex transition of applications to the cloud rather than databases and middleware technology.

While bring-your-own-license movements have marginally slowed the forfeiture of software contracts, overall revenue continues to decline. To balance the lower up-front revenue of subscriptions, many software applications vendors have looked to new customer segments.

Some smaller vendors have responded by moving up-market into large enterprise accounts, but more prevalent is the opportunity for larger vendors -- with solutions that were previously too expensive and complex -- to now pursue SMB accounts.

Digital Business Transformation Upside

Vendors face similar challenges within the IM market segment, as evolution is being driven by changing application delivery methods -- as well as increasingly complex hybrid cloud computing environments.

TBR believes that vendor performance in the infrastructure management space continues to be challenged by delivery model shifts that favor subscriptions and ongoing financial headwinds outside core markets.

However, TBR research identified opportunities for vendors, particularly in the professional services space, to capitalize on demand for business transformation services as more customers adapt their legacy infrastructure to enable agile application development and DevOps methodologies.

Persistent declines of license and maintenance revenues across benchmarked vendors indicate market opportunities in the IM space are shifting to higher-value engagements, according to the TBR assessment.

Popular posts from this blog

The $4 Billion Opportunity for Satellite IoT

In an era where wireless connectivity is pervasive, Satellite Internet of Things (IoT) can change industries, offering leaders unprecedented opportunities to drive efficiency and innovation. As industries across the globe seek to enhance operational efficiency and sustainability, satellite IoT emerges as a pivotal enabler. According to a worldwide study by ABI Research, the Satellite IoT market is forecast to reach $4 billion by 2030, with over 26 million connections anticipated. "Prominent satellite IoT providers such as Inmarsat, ORBCOMM, Globalstar, Myriota, and hiSky have been actively working together with their partners to expand their service offerings and enhance connectivity solutions," said Jake Saunders, vice president at ABI Research . Satellite IoT Market Development The satellite IoT market's expansion is largely fueled by its application across key verticals, including agriculture, energy and utilities, fisheries and aquaculture, and environmental monitorin