CTOs should consider having their development teams take advantage of free, entry-level versions of software – known as freemium software – to test out the functions of commercial products. From the perspective of Michael Williams, BIRT Product Evangelist & Forums Manager at reporting and analytics leader Actuate, freemium software is a resource that can really help the enterprise
Remember back when software was simple? – Either home-grown or licensed from a vendor who billed you for maintenance at periodic intervals? The days when we all knew where we stood?
Things have become more complicated. These days, there’s a spectrum of choices: software code you can download, customize, and use for free (open source) at one end of the spectrum; pre-built software you can buy on perpetual license and install on-premises and customize at the other end of the spectrum; and, in the middle, software you can rent with a recurring subscription (SaaS).
But there’s something new on the radar screen: freemium. You may not know the term, but you know the phenomenon: that ever-growing list of software like Dropbox, LinkedIn, Yammer, Skype (and now our own BIRT iHub F-Type), with free entry-level functionality, followed up the ladder with paid-subscription, heavy-weight functionality. A freemium strategy carves up a product or service’s capabilities (this could be features or capacity) and offers a subset free-of-charge, while offering the full, premium set to paying customers.
Today, freemium is everywhere in the consumer IT space. But freemium strategies are being employed more and more in the enterprise software context too – with freemium pricing strategies increasingly being offered by vendors who see it as a win-win value for the industry and a great way to build potential, future revenue as the enterprise customers in the industry see a need for the paid functionality. Enterprises get what they need, and the software vendors get sales and renewals if products perform, so everyone’s needs are addressed.
Freemium rides the agile development wave
The principle behind the freemium concept is nothing new – it’s just the latest revision of shareware. Enterprise freemium has come along, though, at a very interesting time. The whole mood in enterprise software development is about being iterative, collaborative and agile. In the context of agile software development practices in particular, anything that enables developers to obtain results quickly and with little hassle is innately attractive.
Freemium software tools lend to this by giving developers the opportunity to get on board quickly and try something risk-free, without incurring upfront capital expenditure. This allows developers to explore the value of the software’s functionality, perhaps before they make the decision to purchase the full commercial version, as well as providing a clearer path to a premium subscription version that can smooth the transition, if and when appropriate, to the full commercial version.
Another accelerator for freemium – in our Web-centric world – is the way social networks and platforms mean that word-of-mouth/peer-developer buzz has become the most effective way to build a community of users. With no up-front costs, it’s easy for developers to jump in and try the freemium products their peers are raving about. Generally speaking, the power of a software subscription model (for the CTO) lies in how it aligns corporate expenditures with benefits. In a subscription model, you pay for what you use; you don’t have to pay a large, one-off fee up front – when the benefits of the software haven’t yet begun to accrue, and when significant risks can be part of the mix.
More with less
As discussed above, freemium chimes in well with all of these trends, but it also folds well into wider changes in the way the IT internal resource is being asked to work with the business (think “mixed teams right in the heart of the business units”).
To sum up, the mantra of “doing more with less” is what enterprise IT is all about now, and freemium does just that – providing useful functionality at a lower up-front cost to the business. So freemium makes potentially a lot of sense for your developers and your bottom line.
While they seem similar, it’s worth saying at this juncture that freemium and open source are not the same thing. Freemium software can be based on open source code, but the code inside the freemium software is not exposed. Open source software provides full access to the underlying code so that developers can extend the creation of their own apps. Freemium doesn’t go down this road. But like open source, software vendors of freemium products look to their communities for direction on where the industry is headed, so being active in the community gives you the ability to help ensure that the software you’re using stays on the leading edge.
So freemium really could play a big role in satisfying your enterprise IT team. Developers can get their hands on software quickly with no hassle. If in the first 15 minutes of using the app it can’t prove its value, another freemium offering is just a click away.
Welcome to the future of software development!
The author is Michael Williams, BIRT Product Evangelist & Forums Manager at reporting and business analytics software specialist Actuate Corporation, the primary builder and supporter of the globally successful BIRT open source project (a top level project of the Eclipse Foundation).
Actuate has just launched a freemium version – BIRT iHub F-Type™ – of its core commercial product to its community of 3.5 million open source BIRT developers, as well as other analytics developers.
Follow Michael on Twitter @mwilliams_birt or visit his blog http://blogs.actuate.com/author/mwilliams/