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Predatory SaaS licensing isn’t okay just because it’s better than purchased software

Mike@msn commented on my earlier post suggesting that SalesForce.com customers should be very careful when adding licenses by saying that:

It’s definitely a risk reward proposition, but at least the Saleforce.com licenses are only annual and carry no infrastructure costs.

Consider the downside of purchasing 100 *perpetual* license seats, a server, and Sys Admin for an on-premise solution that goes seasonally unused.

The perpetual license fees are amortized over 3-5 years, whereas the ROI of sForce is usually achieved within the year.

Mike makes a good point, but I do think it’s kind of like saying after the car accident: "Hey, you lost your leg but look at the bright side, you are still alive!

As a counter example, take a look at Sun Grid Compute Utility promising to sell computing like electricity is sold; i.e. pay for what you need, and only when you need it.  That’s how SalesForce.com should be sold!  Add a user, increase your invoice.  Delete a user, lower your invoice (or get a credit.) 

Imagine if your local electric power company was allowed to charge each of it’s customers a flat rate equal to the rate for the peak amount of power they used during the prior "contract" period?  Their customers would be in the poor house, and they’d probably be making more profit than Exxon Mobil did in 2005!

So in other words, comparing SaaS to packaged software is not the point. Just because a specific SaaS provider offers a cost that is only marginally better optimized for customer’s needs than packaged software doesn’t mean they have optimized for customer’s needs. Maybe it is only me but I don’t think we should just accept predatory licensing simply because it costs slightly less than a less evolved alternative.

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