Seven Software Business Models

Seven Business Models

In the 6th century, Pope Gregory the Great, one of only two Popes to be given the title, “the Great”, defined the Seven Deadly Sins, or as they are sometimes called, the Seven Deadly Vices. These were: Pride, Envy, Gluttony, Lust, Anger, Greed and Sloth. Not only did Pope Gregory define the seven sins to avoid, he also included a balancing set of values, the Seven Virtues: Faith, Hope, Charity, Fortitude, Justice, Prudence and Temperance. Many would agree that managing a software company requires a little of both.

Today, as the software industry undergoes a major transformation to an on-demand model, it’s important to understand the seven potential business models before deciding if they are a Vice or a Virtue. You will hear some say, “We can’t move to a software on demand model, the sales guys will never be able to sell it,” while others will talk endlessly about the virtues of the on-demand model and how, “It’ll be great to not have to wonder if this quarter we’ll close that big deal at midnight on December 31.” Some companies operate in only one model; others have products that operate in multiple models. To add some concreteness to the examples, we’ll start from the perspective of a traditional enterprise software model.