News.com writes about how some rented software services (RightNow Technologies, Salesforce.com, NetLedger, Onyx Software, Salesnet, UpShot and Workscape) have survived the shakeout and are looking forward to growth.
Large software systems from the likes of Oracle and SAP typically require an initial investment of many thousands of dollars–if not millions–to cover installation, training, purchase and licensing costs. By contrast, hosted software, which is essentially rented from an ASP, usually costs several hundred dollars a month, an amount small enough to be absorbed among routine expenses within corporate departments.
“It’s just a lot easier for a company to leak this cost into their profit-and-loss statement, over time, than it is for them to take a big hit up front,” said Timothy Clifford, chief executive of Workscape, an ASP based in Framingham, Mass.
That, in turn, helps companies minimize the vexing problem of “shelfware,” or software that lies idle because it is too difficult to support or use.
With hosted applications, “the risk is very low for the customer,” said Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Daly City, Calif. “You don’t buy the perpetual license and hope you use it some day. You pay for what you use, which makes sense in a bad economy. It makes sense anytime, but particularly now.”
Hosted software puts fewer demands on in-house computing staff–as the ASP takes care of updating and maintaining the applications–and, in some cases, even allows business managers to bypass their information technology departments altogether.