The rise of software as a service economy has thrown up some blunt questions. The Netfunfa think tank shares a few of those with you

every individual… endeavors as much as he can… to direct… industry so that its produce may be of the greatest value…. Neither intends [ing] to promote the public interest, not knowing how much he is promoting it…. He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end that was no part of his intention…. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it…”

Two hundred and thirty years ago the Scottish moral philosopher Adam Smith used a particular metaphor to describe a system. The invisible hand was the face of modernism and is the brain behind post modernism. For all practical purposes if Peter Drucker had envisaged the 21st century as the century of postmodernism or post capitalism, the rationale that perhaps best justifies his stand is the rise of cloud services. The invisible hand of the market transforms every requirement into a cloud hosted solution. Every corporation, every individual and every brand have to mark its presence on the virtual platform and encrypt itself in the form of information services. This virtual economy has been referred to as the knowledge economy or information economy in the lingua Franca of economists and sociologists. The corporatized lingo for the same is software as a service economy. But in spite of riding on the invisible hand of the market subscription services or information services are far from being bereft of stings. We discuss the major ones here.

SaaS Enterprise | Netfunda

The shareware syndrome

When Nandan Nilekani of Infosys refers to commoditization as being a threat to the software as a service industry, he has reasons to say so. But selling and buying information is very different from transacting commodities. The biggest difference, perhaps is the failure of the marginal cost pricing theory which worked phenomenally well with commodities. The additional cost of producing multiple copies of information is zero and so the producer of information services losses incentive to produce multiple copies. The problem is compounded further because of the fact that information when not safeguarded by means of intellectual property rights ends up being a public good. Public goods are characterized by non rivalry in production and non exclusion in consumption. So every tweet, every Face Book post, every profile on Linked In  and even a pirated copy of a yet to release number like “Why This Kolaveri DI” goes viral and knock at every doorstep. By the time the information has reached millions of hands, it has already been democratized and there is no incentive for the original producer. In this sense search and social engines are real culprits. Of course, there are question associated with, the accuracy and reliability of information being shared. These are problems like asymmetry of information, moral hazards, adverse selection which have been discussed by stalwarts like George Stigler, De Long and even Paul Samuelson as a part and parcel of the standard literature on economics of software as a service.

Note the term “share”. It is not buy or sell. Various information service providers especially software as a service enterprises had therefore resorted to shareware which primarily works on the principle of try before you buy. Looking at the endeavors of subscription providers like telecom, media, publishers, real estate agents and sub brokers, stock trading consultants, banks, recruiters and recruitment agencies, insurance companies, and many more have therefore been addicted to using free  SaaS billing software, recruitment software,  HRMS software, publishing software, etc.

Browsing is our business

On seeing that free information services are great traffic building measures most, if not all software enterprises have entered into a rat race for providing free stuff discussed above. The economic implication for this production of mass based information services is that as demand for mass information services are met by standardized information service providers, there is ought to be a surge in demand for custom fit information. Think of this. You ask for a piece of information on an academic subject and get more than results on your web screen competing against each other for your attention. What you get is a whole library of information. That’s fine. But what about the time, resource engagement and cost involved. This is where there is and will always be a demand for custom fit information services in the subscription economy.

“I need not know everything. All I need to know is where to find it, when I need it.”

Einstein may have not survived to see the Google era, but was right. The cloud computing economy has shifted gears from a cost based model to a value based model. Netfunda Technologies is one of the early birds that have sensed this demand for custom fit services that are agnostic of platforms and systems. Thus custom fit cloud services billing, online recruitment systems, OJS hosting and online HR system software has become trends. Plus with multiple systems and personalized devices, there is a further scope to standardize as well. Cloud, hosted services in this sense are the future. Truly, one need not know everything. One can find what he wants and when he wants because there is a cloud app builder for that. Search engines and social networking platforms have been the lifeblood of information services. Companies like Netfunda Technologies are offering customizable software products and thus solving the problems of the subscription economy using the invisible hand- cloud computing.