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Talend: Subscription business models driving continuous innovation

29 Mar 17

With the immense success of cloud platforms and Software-as-a-Service (SaaS) models on one hand and the increase of subscription services on the other, it’s clear that software offered as a subscription is becoming the new standard.

In fact, Gartner forecasts that the Asia Pacific public cloud services market will grow 17.7 percent in 2017 to total $10 billion. By 2019, the total public cloud services spending in Asia Pacific will rise to $13 billion, highlighting how well-received subscription-based services are in the Asian business landscape.

This change in the way companies use software has frequently been said to reflect users' demand for flexibility. Indeed, companies are no longer willing to lay out a major investment to get equipped. They are looking to prioritise variability in their spending based on usage and to ensure they benefit from the value of the software before making a long-term commitment.

As business models rotate toward subscription services, if technical developments don't keep pace, a crucial piece of the puzzle will be missing.

Subscription Services: Bringing Innovation as Close to the Market as Possible

Let's forget for a moment how software is billed and take a look at another essential aspect: the value software offers both IT and business users.

This is where the real challenge is: The ability to provide IT managers with frequent releases that encapsulate current technology innovation and customer demands, as well as an easy to manage and scale solution.

For business users, cloud solutions provide the ability to have quick access to the compute resources and apps you need when you need them to help deliver qualitative results faster, cheaper and with higher quality in order to create a competitive advantage.

A perpetual license model also allows for periodic software updates. However, the rhythm of these updates and the frequency at which they are available to users cannot be compared with the ongoing agility and innovation offered by providers of subscription services.

This is not related to how their software is marketed, but rather to the vendor's ability to establish a continuous cycle of innovation for its products, the rewards of which are transfer to their customers.

Big Data and Cloud: Continuous Innovation is the Model

The continued growth in the use of big data and cloud technologies is in and of itself, a compelling proposition for continuous innovation. The speed at which these technologies become obsolete requires users to adapt at an unprecedented rate.

Consider how the platforms adopted by customers today can become obsolete in as little as 12-18 months—Spark replaced MapReduce in record time and Spark 2.0 is a revolution compared to Spark 1.6.

It is essential for integration, processing and operating software vendors responsible for these massive volumes of data to get as close to the market as possible, which means complying with key standards such as Hadoop, Spark and Apache BEAM.

Not to mention they need to align themselves with the open source communities defining them. In practical terms, a company needs to anticipate the product roadmap needed to align with these innovative technologies and keep pace with customer demands.

Open source technologies—which are backed by the collaboration of a technically adept developer community and various partners—are particularly well suited to a continuous innovation model. Additionally, subscription services are a logical way to embrace and foster a continuous innovation model.

Previously dominant or legacy software models, marked by "proprietary" software solutions and perpetual licencing, took 18 to 24 months to deliver new features. If you want your business to keep pace with the advances in machine learning, IoT, real-time data streaming analysis capabilities, depending on a model that consists of delivering new versions every 18 months is simply not viable for businesses.

To Support the Emergence of New Data Uses

Modern solutions for big data and cloud integration must be at the front lines of technology innovation. Not only to address customers various and rapidly evolving challenges—including customer intimacy, business sustainability, agility and economies of scale—but also encourage the emergence of new data uses like streaming, real-time insights and self-service in order to gain a competitive advantage.

In the past, a technology feature could last for years without risk of becoming obsolete (e.g. SQL). Today, the speed at which big data and cloud platforms become obsolete is mind blowing. Competition is fierce between companies using digital transformation as a strategic lever for performance and competitiveness.

Article by Jason Bissell, general manager of Asia Pacific and Japan and Calvin Hoon, regional VP for Sales, Asia Pacific of Talend.

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