Software As A Service

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Table of Contents

Introduction
Software market
Software services
Rise in software demand
Competition within the software industry
Changes in the software industry
Impacts on vendors
Impacts on buyers
Conclusion
References

Introduction

Software services were first introduced to the market in the 1960s through utility computing by the IBM and other service providers in that time (Cusumano, 2004). Today, a number of service providers are involved in this industry and they include Google Apps, cloud, Amazon web services, Microsoft, Oracle to mention but a few (Cusumano, 2007).

The software industry has developed since then and with the current technological advancements, the industry has grown into a big business characterized by very high returns (Utterback, 1994).

This has been influenced by the rising need for businesses to engage the use of ICT hence demanding softwares to facilitate the migration.

The majority of the businesses today have embraced ICT, which primarily depends on software products (Christensen, 1997). This paper will discuss the software industry, impacts of competition in the market, the rampant changes in software development as well as other issues involved in the software industry.

Software market

Before the introduction of softwares, computers used to be manually programmed by the customers or the limited computer vendors to perform specific functions (Knecht, Leszinski & Weber, 1993). The software market was developed fully in the 1960s as mentioned earlier.

This was soon after the mass production and sales of computers (Hempell, 2006). Due to the sale of large quantities of computers to universities and the government, the need for softwares created a high demand. In the beginning, software developers did it for non-commercial purposes where softwares were exchanged freely among users (Oliviera, 2012).

Programming methodologies were greatly extended by the introduction of the low priced microcomputers, which spread the use of computers to more user (Clair, 2005). These enhanced innovations and crated business opportunities for software developers as the demand and market for their products was expanding (Galin, 2004).

The market expanded further in the mid 1970s, influenced by the introduction of personal computers, PCs (Hoch, 2000). This enhanced the market by creating demand on softwares for other functions like games and other utilities (Huang &Denne, 2003). By that time, the Microsoft operating system was the major software controlling a significant percentage of the market.

Software services

Software services include capabilities that a software gives to a computer allowing it to perform different purposes (Mowery, 1996). Service in computing is defined as the mechanisms that give a computer the capabilities to access different functions (Cusumano & Selby, 1995). The access to these functions is enabled by specific interfaces as provided by the developer (Platt, 2007).

Software services depend on the specific function that a consumer requires. For instance, every computer requires an operating system to function. These are systems made by software companies for commercial intentions (Fowler & Beck, 2001).

The antivirus is a good example of software used in computer which performs very vital functions. The computing world has suffered for years due to the entry of harmful softwares in circulation (McConnell, 2004).

To counter the effects of harmful programs that have the capability of destroying a computer, software developers created other softwares with the capability to detect and block harmful programs from getting into the system (McBreen, 2002).

In addition, there are other products such as game softwares, networking softwares, surveillance softwares among others that has really influenced the industry turning it into a commercially viable engagement.

Rise in software demand

In the recent past, the demand for software engineers have been on the rise and this is a clear indication that the services they offer are highly valued and greatly needed in the market (Tockey, 2005). Software engineers offer software services such as developing softwares or maintaining the existing ones.

A number of factors have greatly contributed to the increase in the demand of softwares globally (Thayer, 1997). Competition between electronic manufacturers, especially computers and cell phone producers, have contributed to the increase in demand of software services (Poppendieck & Poppendieck, 2003).

Another factor influencing the rise in software demand includes both human security, property and financial security (Humphrey, 1995). The world has become more depended on software services to run most of the very critical areas.

This includes banking, transportation, security forces, and governance to mention but a few (Kan, 2003). Without these services, the world runs a risk becoming critically dysfunctional. World trade and other international interactions are highly depended on software platforms (Poppendieck & Poppendieck, 2007).

Competition within the software industry

To effectively determine the competitiveness of a product, it is imperative to fist evaluate the cost of production of it. Production of software is relatively simple compared to other computer components such as the Hardware. The greatest cost incurred in developing a software can be summed as the efforts made in creating its design.

This therefore means, when Softwares are created, the reproduction cost is virtually zero (Cohn, 2004).The above factors have increased the level of competition in the industry. New softwares are being created on a daily basis and great innovations are coming up every time new softwares are released in the market.

The number of free softwares in the market and specifically on the internet platform outweigh the number of commercial software (Sommerville, 2007). This has negatively affected the competitive environment of vendors because their sales are reducing although the demand is going up.

Concisely, vendors are not really enjoying the maximum benefits enhanced by the growing demand for software services. The innovations and improvement in the software industry have greatly benefited the buyers because competition has made the prices to drop significantly (Ramesh & Desikan, 2006).

Changes in the software industry

The software industry is randomly changing in erratic dimensions. These changes are definitely influencing the competitive environment of software trade. Changes in the competitive environment in the software industry have always had direct impacts on both the vendor and buyers as noted earlier. History has shown that every industry experience a massive perfection change in every 30 years.

To prove his theory, Martin (2003) noted that software giants, Microsoft, Oracle and SAP were created approximately 30 years ago. The market is rapidly changing and the products are significantly advancing in efficiency and functionality. The buyers are the greatest beneficiaries of the competitive environment caused by software as a service.

Experts predict that the software industry will experience a level of perfection and in five years, there will be a new generation of industry giants. The traditional model of purchasing software licenses after every lifetime period, normally 3-5 years, is gradually fading away (Martin, 2011).

Most companies are now subscribing through the internet and their service providers can deliver their orders directly (Glass, 2006). This is the new purchase model in the software business and traditional service providers like Microsoft and Oracle risk losing in the business (DeMarco, 1995).

Impacts on vendors

Software vendors are greatly affected by the software industry both positively and negatively. It is apparent that vendors cannot enjoy the direct benefits of selling their products. Nonetheless, they still are getting their remittances from other indirect platforms.

Software service vendors like Google and Yahoo have developed ways to sell their products indirectly. The two examples given above offer software services like the Search and E-mail as basic desktop applications, which the customers do not pay for (Cusumano, 2008).

However, they have allowed other businesses to place their advertising on these platforms hence the firms advertising through their platforms are charged for the service (Weinberg, 1998). However, the SAAS model has caused confusion in the industry and more specifically to the vendors.

This model eliminates the traditional separation of product and service remittances (Weinberg, 1994). Through this model, the maintenance cost has been eliminated from the chunk of revenues and therefore reducing service revenues as well (Cusumano, 2008).

Impacts on buyers

Software as a service is on the hand benefiting the buyers in that particular useful Softwares are offered free of charge. The growth in the software industry has introduced new applications and platforms in the market which have improved the standards of living for buyers and consumers.

For instance, the Google search application has influenced the current generation as a source of information. Other platforms like Facebook, the tweeter and YouTube have helped in improving communication.

The buyers are the principal beneficiaries of the changes realized in this industry since the changes are meant to improve their experiences while using the softwares. Software service providers are in competition trying to capture the attention and loyalty of the consumers leading to the decrease in prices. With the increased competition in the software industry, prices are significantly dropping for the benefit of the customer.

Conclusion

This paper has discussed the different ways which software as a service has changed the way business is done in the entire industry. The paper introduces the topic by giving a brief historical account of the software industry. Then an evaluation of the software market was done to establish factors that led to the increase in the demand of software services.

The paper thoroughly discusses the competitive environment of the industry citing a number of impacts caused by firms rivalry. The impacts of changes in the industry on both the vendors and the buyers have also been discussed in the entire paper but more precisely in the last paragraphs of the paper. This essay outlines the different ways in which software development has influenced the competitive market in the industry.

As shown in the paper, the software market is rapidly growing and the future seems to be held by this emerging market. Economies like the United states of America and China as well as most of the developed countries are basically driven by ICT.

This creates a broad market for the development of software products. Therefore, software engineering is the next big industry coming up in this generation and it should be harnessed to the maximum. The introduction of the software industry is an opportunity for young and imminent software engineers.

This has helped and will continue supporting them to earn a living through the creation of software products that meet the needs of consumers. Therefore, software market development should be embraced and appreciated as the new way of life in this age and time.

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