Why should you consider metering SOA and Cloud Computing services?
5th Oct 2016
Why should you consider metering SOA and Cloud Computing services?
It's about taking a step toward 'unburdening' your customers
Ask anyone what their #1 drawback might be with regards to investments and purchases and you're going to hear nearly the same thing, large up-front cost(s). Consumers want a product or service that performs well and is reasonably priced. Unfortunately for most consumers, their enterprise software solutions provider (or list of providers) often charges hefty lump sums for their services. As a result, many organizations or individuals that might like to take advantage of cloud computing or SOA won't indulge them with business. This is unfortunate for service providers as well; they're missing out on a potentially large cross section of revenue.
So what's the simplest and best solution here? Since both cloud computing and SOA are specialized forms of service which are essentially 'delivered' to a client, they function in nearly the same manner as household utilities. So why not simply meter your SOA and/or cloud computing services to new (and/or current) customers (on a monthly basis, for example), instead of losing them immediately to excessive upfront prices?
Most service providers might see a move toward metering as a loss in opportunity to make big purchases or investments, but this is only true for new providers. More experienced or developed providers will already have extensive resources in place and won't be taking much of a chance at all. Younger companies might be using steep up-front charges from their initial clients to finance the necessary expansion of their operation, purchase hardware, development software / applications, or hire key personnel. In cases like that, higher initial payments from customers might be justified, but one should always keep their customers expectations and viewpoint in mind when establishing services or redefining them. Limiting customer options is generally not a great way to increase sales, image or generate buzz.
Regardless of the potential of adding new customers, there will be some big merchants that will resist changing over to or offering a metered service. This is mostly due to fear of not being able to offset the loss in revenue, and it would require some level of sustained commitment from a fairly large customer base over a certain length of time. This is why larger companies (which really have the most to lose by changing their strategy) will most likely aim for some sort of compromise between the two strategies. Perhaps moderate, up-front licensing costs coupled with minimal monthly payments? Regardless of what the larger institutions decide upon, if enough consumers come to expect cloud computing and/or SOA to be offered as metered services, the larger providers will have no choice but to alter their strategy in order to compete with those that already have.
Consumers of cloud services or SOA have much to celebrate when it comes to metered service models. Obviously, avoiding large upfront costs is right at the top of most customers' lists, but they can also benefit from metering in other ways. If a service is metered like electricity for example, then users would only be paying for the software service(s) / bandwidth / total usage time they are personally responsible. From the customer's point of view, this is more than adequate, it makes total sense.
For anyone to pay a flat amount for any online service independent of their level of usage only pushes them toward using the service 'as much as possible'. This in turn is bad for the vendors as they will be faced with a glut of users overusing their services when they have no need which in turn might lead to more required maintenance, frequent breakdowns, or completely inefficient use of resources. In other words, by charging a higher monthly flat rate, providers are encouraging their customers to overuse the system in order to 'get their money's worth'. In the long run, this might actually lead to higher operational costs, thereby damaging profits.
Currently, software services are seen as a hazardous territory when it comes to investing. Businesses have no real way to gauge the potential gains or losses in profits by simply analyzing and evaluating services like SOA. However, as SOA becomes more commonplace, apprehensive organizations will begin flocking to providers in droves with service requests. What metering (for cloud computing and SOA) actually does is speed up the process a bit by allowing providers to offer potential customers more incentive to buy/invest. Whether or not an organization is able to retain their customer base is more of a testament to their quality of service than anything; metering at least gives those with semi-limited means the opportunity to determine if a service is right/good for them.
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It's about taking a step toward 'unburdening' your customers
Ask anyone what their #1 drawback might be with regards to investments and purchases and you're going to hear nearly the same thing, large up-front cost(s). Consumers want a product or service that performs well and is reasonably priced. Unfortunately for most consumers, their enterprise software solutions provider (or list of providers) often charges hefty lump sums for their services. As a result, many organizations or individuals that might like to take advantage of cloud computing or SOA won't indulge them with business. This is unfortunate for service providers as well; they're missing out on a potentially large cross section of revenue.
So what's the simplest and best solution here? Since both cloud computing and SOA are specialized forms of service which are essentially 'delivered' to a client, they function in nearly the same manner as household utilities. So why not simply meter your SOA and/or cloud computing services to new (and/or current) customers (on a monthly basis, for example), instead of losing them immediately to excessive upfront prices?
Most service providers might see a move toward metering as a loss in opportunity to make big purchases or investments, but this is only true for new providers. More experienced or developed providers will already have extensive resources in place and won't be taking much of a chance at all. Younger companies might be using steep up-front charges from their initial clients to finance the necessary expansion of their operation, purchase hardware, development software / applications, or hire key personnel. In cases like that, higher initial payments from customers might be justified, but one should always keep their customers expectations and viewpoint in mind when establishing services or redefining them. Limiting customer options is generally not a great way to increase sales, image or generate buzz.
Regardless of the potential of adding new customers, there will be some big merchants that will resist changing over to or offering a metered service. This is mostly due to fear of not being able to offset the loss in revenue, and it would require some level of sustained commitment from a fairly large customer base over a certain length of time. This is why larger companies (which really have the most to lose by changing their strategy) will most likely aim for some sort of compromise between the two strategies. Perhaps moderate, up-front licensing costs coupled with minimal monthly payments? Regardless of what the larger institutions decide upon, if enough consumers come to expect cloud computing and/or SOA to be offered as metered services, the larger providers will have no choice but to alter their strategy in order to compete with those that already have.
Consumers of cloud services or SOA have much to celebrate when it comes to metered service models. Obviously, avoiding large upfront costs is right at the top of most customers' lists, but they can also benefit from metering in other ways. If a service is metered like electricity for example, then users would only be paying for the software service(s) / bandwidth / total usage time they are personally responsible. From the customer's point of view, this is more than adequate, it makes total sense.
For anyone to pay a flat amount for any online service independent of their level of usage only pushes them toward using the service 'as much as possible'. This in turn is bad for the vendors as they will be faced with a glut of users overusing their services when they have no need which in turn might lead to more required maintenance, frequent breakdowns, or completely inefficient use of resources. In other words, by charging a higher monthly flat rate, providers are encouraging their customers to overuse the system in order to 'get their money's worth'. In the long run, this might actually lead to higher operational costs, thereby damaging profits.
Currently, software services are seen as a hazardous territory when it comes to investing. Businesses have no real way to gauge the potential gains or losses in profits by simply analyzing and evaluating services like SOA. However, as SOA becomes more commonplace, apprehensive organizations will begin flocking to providers in droves with service requests. What metering (for cloud computing and SOA) actually does is speed up the process a bit by allowing providers to offer potential customers more incentive to buy/invest. Whether or not an organization is able to retain their customer base is more of a testament to their quality of service than anything; metering at least gives those with semi-limited means the opportunity to determine if a service is right/good for them.
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