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How Subscription Services Can Suffer the Startup

How Subscription Services Can Suffer the Startup

From Netflix to Dropbox, iCloud to AWS, almost all Internet users likely use online cloud subscription services in one form or another, particularly since many companies are adopting this business model as a primary revenue stream. And it’s no wonder. According to recent statistics by zdnet.com, Microsoft Azure’s commercial cloud revenue hit $11B US by July 2019 while Google Cloud Platform’s annual run rate was pegged at $8B US for 2019. These, of course, are just the tip of the iceberg.

On the startup front, many rely heavily on these service offerings for such utilities as password protection (eg. LastPass); sales, contacts and workflow pipelines (eg. FullContact); and HR management (eg. Lever) - among countless other needs and purposes, usually due to lack of inhouse resources or for stop-gap time saving convenience

But is this convenience worth the price, especially with the, shall we say, business practices many of these subscription-based companies employ? Let’s have a look…

The Online Subscription Models

The three most common types of cloud subscription models used by startups are Software-as-a-Service (SaaS), Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS).

SaaS

Software as a Service, also known as cloud application services, is still the most used option for businesses in the cloud market. The SaaS model allows your business to quickly access cloud-based web applications which are controlled and maintained by the vendor, bypassing the need to install new infrastructure.

While Saas is good for quick ecommerce launch, short-term projects that require easy collaboration and for applications that require web and mobile access, both functionality and overall speed are sacrificed. Plus, there is always a security concern when the vendor has control over the programs that your company is using and when sensitive business data is exchanged with public cloud-based data centers.

PaaS

Although similar to SaaS, the Platform as a Service model provides a software creation cloud platform for in-house developers to build and use customized applications (aka middleware) without having to worry as much about storage, infrastructure or hardware/software installation. Unlike SaaS, you maintain control over the deployed applications.

While Paas offers a significant reduction in code that has to be written for customized applications, generally provides a variety of options designed to assist with development and testing, and is scalable due to its use of virtualization technology, system integration (like runtime issues), compatibility and the dreaded recurring security risks can be substantial concerns.

IaaS

Regarded as the most flexible of the big three cloud computing models, the Infrastructure as a Service model gives control to the user over the management, monitoring and customization of infrastructure, typically through a dashboard or an API. Also, IaaS generally provides the same technologies and capabilities as a traditional data center, taking the burden of having to physically maintain or manage all of it away from the user.

However, like the other 2 service models, the IaaS has similar legacy, compatibility and security issues, plus additional resources and training may be required for the workforce to learn how to effectively manage the infrastructure. It is also the most expensive of these platforms by quite a margin.

Of course as cloud computing service subscription models continues to increase in popularity and profit, many hybrid offspring have evolved including Analytics as a Service (AnaaS), Artificial Intelligence as a Service (AIaaS), Backend as a Service (BaaS), Data as a Service (DaaS), Infrastructure as a Service (IaaS), Logging as a Service (LaaS), and Network as a Service (Naas); naming but a few to a list that is growing on an almost daily basis.

The $$$ Problem

For most startups, particularly self-funded ones, every nickel carries weight and it is the responsibility of the decision makers to not only decide which services they need to outsource, but to diligently keep track of the money spent on said services. Negligence here can suck money faster than an industrial vacuum can suck sawdust at a retired carpenter’s farting convention.

However, an increasing number of companies seem bent on squeezing these precious nickels into balls of mettle. Some common shoddy subscription practices are: ridiculously long and inflexible lock-in terms; no notification when the trial period is up; a complicated and convoluted cancellation processes; an absence of any confirmation if the cancellation of the services took effect; and automatic “add-ons (re: additional costs)” embedded in the tiny-font fine print, complete with the convenient “I agree” checkbox underneath.

A Fair Solution

Vendors should offer a free trial without payment information and then suspend the account until a commitment is made. That way it can be ascertained that there is legitimate interest from the customer. Offering shorter term lock-in offerings and discounts on low usage wouldn’t be terrible options, either. And how about sending emails to your consumers letting them know when subscriptions are due to renew? How hard is that? These gestures will be not only appreciated, but will most likely garner a trusting relationship and lasting brand loyalty.

To take what money you can through erroneous or vague cancellation practices, dodgy lock-in commitments, and/or consumer forgetfulness is both weak and unethical. While it may bring you money today, it will tarnish your reputation in the future, especially with social media intent to expose shady companies. So cloud service subscription vendors the choice is yours; do you want a quick n’ dirty buck or a steady one?

Of course, alluding to any specific perpetrators wouldn’t be kosher, but suffice to say that certain aforementioned “examples” (after the intro) are mentioned for a reason.

Sources

https://www.bmc.com/blogs/saas-vs-paas-vs-iaas-whats-the-difference-and-how-to-choose/

https://www.paranet.com/blog/bid/128267/the-three-types-of-cloud-computing-service-models

https://en.wikipedia.org/wiki/As_a_service

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