Cloud-Based Subscription Services
Cloud-based software will trigger an explosion of online subscription services.
A company was pitching us recently on the merits of its business management software. Its software would run on our computers and other devices -- all coordinated by server software -- and would consolidate all of our work process in one place (e.g. client management, documentation, email, scheduling). The fee was a one-time cost per user for the software but we would have to pay for major updates in the future.
While the software was impressive, it left us scratching our heads. Why make it an application on our computers with a one-time fee rather than making it a cloud-based app that you subscribe to on a monthly basis, a trend that has been awhile in the making with companies like Google, Apple, Dropbox and Freshbooks leading the way?
Cloud-based services, also known as SaaS apps (software as a service), make more sense for everyone involved. SaaS apps are easier for customers to access, use and pay for, with the low subscription fee essentially amortizing what used to be a more onerous capital cost. They provide the developer with a consistent, predictable cash flow, and a far easier/cheaper development and upgrade process.
When we first subscribed to Google Apps for business (don't know the current brand name as it seems to change every six months!) and saw its rudimentary online word processor, spreadsheet and presentation apps, we said this is the end of Microsoft Office. To this day, the Google apps can't shine the shoes of Microsoft Office but one day -- five or 10 years down the road -- all of our business documentation will be done through online services for which we pay a monthly or yearly subscription.
What this means is that in the future we won't own many of our current "possessions," we will just subscribe to them. No need to buy software as the service provider owns and manages the app. Why buy SOME music when you can access ALL music for one small monthly fee? Why buy hardcopy newspapers, magazines and books when you can subscribe to all of them online through any of your devices and get them no matter where you are in the world? You don't have to make a heavy capital, resource and manpower commitment to the implementation of your own inventory control/logistics management because IBM will do that for you for a much smaller monthly fee on a long-term contract (do we hear win-win?).
The market for cloud-based services will expand significantly because it is easier for developers (cheaper development and servicing costs, more reliable and predictable cash flow) and for customers (no software to install and maintain, accessible from all devices, low monthly cost making it easier on cash flow).
Protecting against online data theft
Online threats and the demand for cyber-security will both rise to a new level.
Almost everything we do now -- as people and as organizations -- is somehow connected to the Internet. What few things we do that aren't yet connected most certainly will in the future. Much of that data is sensitive and it would be anything from embarrassing to dangerous if that information was breached. That means it is valuable and things of value get stolen.
Breaches of online security are, by no means, a new threat. It's just that it is a threat that was typically only taken seriously by the largest and most sophisticated of organizations (public and private sector), and even many of them haven't given it the attention it deserves. One of the most recent companies to fall victim to data theft is Target, who had the data from as many as 40 million credit card records hacked leading up to the 2013, post-Thanksgiving "Black Friday" pre-Christmas shopping season.
While it is less than half of the data from the 90-million credit card records that were hacked from TJX Cos Inc. in 2007, it still represents a potential minimum loss of $8 billion, based on an average of $200 per record (Ponemon Institute). And that doesn't include the costs incurred by related organizations (e.g., the cost of investigations and extra security measures incurred by the affected credit card companies) or the how much brand trust is devalued as a result of the negative publicity.
Two reasons hackers hack are for commercial gain or to cause mayhem (even if it is only the secret notoriety of anonymous hackers who are thrilled just to break in). It is impossible to create an impregnable wall around data so it is only a matter of patience and ingenuity for hackers to find and exploit the small cracks in even the most secure systems. In 2014, more and more hackers will realize that the low hanging fruit isn't the big, data rich companies, it is the smaller companies that have ineffective or non-existent security that will result in the best ROI for them. And more and more companies will realize just how vulnerable they are, and how expensive it can be to scrimp on cyber security.
So online security isn't a new trend for 2014, it is just one that will rise to a new, and significantly more expensive, level this year.
Tomorrow
- Apple and Google will pull away in the race to control how we manage our lives