As you may know, Consona has been working to make our software and services available on demand via the Amazon AWS platform. And, so far so … GREAT! We have had multiple customer pilots, and now have several customers live and in production. We have been feverishly working on ensuring that our customers have a very SaaS 1.0 (multi-tenant applications on the cloud, e.g., Concur or SFDC) experience, meaning the same high level of service, such as automagical upgrades, great accessibility, and streamlined support processes. The Consona Cloud is being designed to be a truly turn-key solution. In addition to equaling the traditional benefits of SaaS 1.0, we also hope to surpass them, building an offering that is more elastic, allows for code-level customizations, and offers portability to the solution—should they ever choose to move the software from our operations to another (including in-house).
Ergo, SaaS 2.0 (a term I’ve introduced in previous blogs).
One thing that has occurred as a by-product of this work is the realization that we have an opportunity to move to a truly consumption-based cost approach—something that is actually part of the very definition of cloud computing, according to both Gartner and on Wikipedia. Because our underlying data infrastructure (using AWS) is billed to us on a consumption basis, why not pass this along to both new and existing customers? And to take it a step further, why not pile on the cost of our software using the same consumption-based model?
The advantage here is our customers can actually have little to no upfront costs to begin leveraging our solutions in their daily operations. No long term contracts. Pay month to month, cancel anytime, no lock-ins. I know I sound like a waterbed mattress store that is having the old “going-out-of-business, this-is-craaaaaazy sale,” but it’s true. So, consumption-based approaches might be a pretty compelling offering. Especially underlined by the reality that while the economy is beginning to recover, IT spending is not. This seems to be particularly true with capital expenditures like servers, networking appliances, etc., which are typically required for customers who choose to implement our solutions on premise.
But are there hidden costs for consumption? Is this like the No Income Verification home loans that got the US economy into trouble in the first place? Certainly it could be, especially if there was a hitch or balloon payment in the mixture. Although we don't have any of those. And yes, theoretically, if one of our customers decided to take the consumption-based approach, there could be no cap on what they would consume and therefore be charged. But without penalty balloon payments or drastically changing daily operational processes, doesn't that seem a bit paranoid? What I mean is that most of our customers have a pretty predictable volume in interactions with their customers and other activities that can be well estimated over time. And based on business trajectories and projections, it seems to me that with an adequate amount of planning, consumption based pricing could offer significantly lower costs over time—despite the risk. It works for the electric bill, right?
On the other hand for those customers that want a bit more predictability in their expenditures, we can certainly put caps in place or customers could purchase perpetual licenses. In my opinion this will in most cases cost the customers more over the long term, but for various reasons, it is worth it to them.
To each their own.
We offer both.