> its about getting continual income from the users of the software, and increasing vendor lock-in
Unfortunately, lock-in will occur regardless of whether it's an on-prem software or SaaS. Companies don't go around changing their platforms every year or even every 3 years. So, one way or the other, the vendor will derive revenues from Annual Maintenance or Subscription. How's NetSuite unique in that regard?
With your standard ERP software, after you buy the software, it's yours. They can't take it away from you, they can only charge you for support. You might even have unlimited users/business units. Add 100 employees and it doesn't cost you a dime.
With a SaaS solution like NetSuite, they can charge you per user. You might pay $x/year per user, but if you add 100 users you're paying x*100 more per year.
You're also going to be paying the SaaS provider for every month/year you continue using the system. You might own your server and software but with a hosted system you're paying over, and over again. Which can be good if you're doing opex vs capex.
Companies generally switch ERP platforms every 10-12 years. Not only do new products come on the scene, but systems decay over time.
With your standard ERP software, after you buy the software, it's yours.
Any company that uses an ERP system is pretty much forced to upgrade regularly to keep in compliance. And every ERP system I've ever used or evaluated charged by the user.
When we used Great Plains, sure it was ours. But the price was based on the license count. Then after 1-3 years support would end and we'd have to upgrade. Oh, we could have decided not to upgrade. But then our owner's auditors would come along and give us bad grades for using an unsupported system. We'd be out of compliance with our lenders. And we just sell stuff, we don't have to worry about HIPAA or ISO standards or any other compliance issues that some companies deal with.
So we subscribed to the support plan, paid yearly and were entitled to all upgrades as they came out + some limited support from MS (which we never used).
Now we are on NetSuite and we pay annually, just like we did before. Except now upgrades are handled for us and I don't have to purchase a new server every 3-5 years.
>Add 100 employees and it doesn't cost you a dime.
That's not always the case. Especially in the space that NetSuite operates in. Microsoft charges per CAL. SAP, Oracle and IBM have their corresponding pricing structure.
> They can't take it away from you, they can only charge you for support. You might even have unlimited users/business units. Add 100 employees and it doesn't cost you a dime.
You probably don't have an unlimited-seat license, because that's not how most are sold, and the market that buys ERPs (and enterprise software in general) is primarily motivated to pay for software for support, so "they can only charge you for support" isn't a meaningful limitation.
Unfortunately, lock-in will occur regardless of whether it's an on-prem software or SaaS. Companies don't go around changing their platforms every year or even every 3 years. So, one way or the other, the vendor will derive revenues from Annual Maintenance or Subscription. How's NetSuite unique in that regard?