Why IT shouldn't buy into the 'subscription economy'

Supposedly, we don't want to own things anymore, and the impact on IT will be enormous. Don't bet the farm on it

In case you hadn't heard, ownership is out. Instead, it's all about the "subscription economy" -- if the latest in a long line of extrapolations from a very small number of data points is to be believed.

The theory is simple. Whereas before we liked to own things, we don't anymore. What we want instead is to pay less money right now in exchange for the right to pay again next month -- or not, at which point whatever it was we used to need goes away.

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How do we know this massive change in how businesses and consumers view ownership is a megatrend? Because Salesforce.com has been a raging success, as have at least two other publicly held SaaS providers, according to the ever popular Gartner, which doesn't identify them. At least one privately held SaaS provider of my acquaintance also supports this theory.

(Digression: When you read any article that proclaims a megatrend and supports it with just one or two examples while ignoring a vast volume of evidence pointing in the other direction, remind yourself that the plural of "anecdote" is not "data.")

I suspect this fabulously new idea is a "bootstrap trend" -- yet another attempt to turn an anecdote into a major change in how things work. It's exemplified by something I'm sure you've never heard of before: leasing instead of buying.

The subscription economy in a nutshell

The subscription economy isn't entirely new. A familiar example: Instead of buying a car, taking out a loan, and paying, say, $500 per month for three years, after which you own your car free and clear, you lease the same car, paying $300 per month for three years, after which you've spent $7,200 less, don't own a car, and go through the same exercise all over again. I'm confident your local car dealerships will be happy to provide additional details, without resorting to terms like "subscription economy" to persuade you it's a good idea.

It's just as well because this is a terrible example and leases have early termination penalties; if you decide you don't want a car next month, that's just too bad. The better automotive example is renting a car. As you know, more and more Americans prefer to rent cars from Hertz, Avis, National, or Budget when they're in the mood to drive instead of buying them.

What's that? We don't do this? How about the highly touted Zipcar, which lets members reserve cars when they want them and give them back when they don't, paying either by the hour or by the day?

Zipcar might be highly touted, but touting isn't the same as making either money or sense. Zipcar charges a bit under $60 per day, which puts it in the same price range as traditional rental car companies. One more minor issue: Zipcar has yet to turn a profit.

On such evidence are bootstrap trends built, at least if the trend is being reported by someone who has a SaaS ERP alternative to sell you, as is the case with Tien Tzuo, Salesforce.com refugee and founder and CEO of Zuora.

Please. Let's take a deep, cleansing breath, say namaste to the people around you, and get rational about this, instead of deciding what to do based on some trend that might or might not be an actual trend, let alone one that might make actual sense.

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