What comes after Cloud Computing and Subscription Revenue? Crypto Computing and Transaction Revenue!
Ok, I’ve been now for somewhere around five years at a large enterprise IT company, which states from themself that they run the most mission-critical business processes in the world. Short condensed summarization about what we do:
Job-to-be-done (JBTD): We sell software to enable business processes.
Throughout history, this JTBD did not change. But the delivery of value and capturing a fair size of this value aka commercial model was massively changed through different technologies and architectures.
In this blog, I want to argue that somehow the same transition is happening with decentralized ledgers like Etherium, which we already have seen in On-Premise to SaaS.
- What is the current state of enterprise software?
Cloud and Software-as-a-Service Companies are the massive trend for enterprise software by far. Every company, vendor, partner, or start-up is pushing this model as it has great benefits to users and producers. SaaS was enabled through cheap pooling of computing resources what is now called “Cloud”. This enabled building software cheaper and more rapidly.
2. What could potentially come after cloud?
Now a trend occurred which has built-in trust as a core function. Bitcoin or any other currency relies on a peer-to-peer network to send all kinds of “value” from A to B without any third party. This makes cross-enterprise processes much faster and cheaper and will in my opinion spark the next generation for enterprise software.
First, there was the “Client-Server” epoch where enterprises purchased a license to use their software and enable processes. Enterprises needed to deploy and manage everything on their own which makes it complicated and cumbersome.
Second, the current age is the “Cloud” epoch. The customer can choose between application, platform, or infrastructure to build and run their processes. This is now in full swing and many benefits like standardization or agility can be drawn from this model.
Third, the emerging “Crypto” epoch. Revenues or money will be really distributed between the community that manages that kind of enterprise application. Enterprises need some kind of token to participate in this community either as miner, validator, buy-and-hold the tokens or simply purchasing the services they need with it. The benefit is relying not any more on third-party services to transfer money or assets from company A to B.
Please see below a small illustration on the potential evolution and already past evolutions:
3. What are the ways to monetize on decentralized enterprise applications?
You can not buy decentralized applications and use them as you can do with cloud applications. For most decentralized applications you need to pay a fee to execute the application or transaction once, compared to the cloud where you pay a recurring fee most often based on usage. But then how would enterprise vendors make money with such kind of “crypto” model? There are ways to make money with decentralized applications, but they are totally different from the direct revenue streams current SaaS companies see through their recurring business model. Decentralized enterprise applications give you three ways to make money in the infrastructure layer (e.g. nodes), the application layer, and services. Below you can find a small description on how this is meant:
- Mining: This is simply used e.g. for Bitcoin and the Proof of Work consensus algorithm. GPUs “mine” a mathematical riddle and if they succeed they get a reward. Potentially enterprises could do it as well and mine Bitcoins.
- Staking: This is used for Proof of Stake consensus algorithms. First, you need to purchase the token and then “stake” it. Now you can become a validator node and the staked amount is some kind of deposit, motivating you to validate the transaction truthfully. Enterprises can buy tokens and participate as validator nodes and earn returns. An example could be Etherium 2.0.
- Tokenomics: This is more or less the investing and buy-hold strategies. Tokenomics describes the practice of aligning the token economics to the stakeholders e.g. developers, investors, community, ….
- Professional Services: The basics of enterprise software. You could do consulting and certain implementation based on this decentralized technology.
I hope gave you some food for thought about the future of enterprise software. This blog is really just some kind of brainstorming for me to structure it a little bit. I still have many open questions about how decentralized enterprise software could work and get adopted in reality, but I wanted to get this blog out, to start somewhere.
Please reach out to me on LinkedIn or just drop a comment in case you want to discuss certain areas. I’m looking forward to it.
