In the past, it wasn’t all that often that you saw a small, possibly start-up business with the same software and technology set-up as a large organisation. The reasons vary but pricing and enterprise-centric software is one factor.
There are some software companies that effectively price themselves out of reach for small businesses. They aren’t interested in serving a company who want a cheap package where they won’t make a huge return on investment.
This is, however, beginning to change. With cloud applications that scale in price based on a company’s size and what they’re after, it’s becoming more common to see a small company and a large organisation using similar software applications and services.
From using cloud storage to office applications the gap between enterprise targeted software and software for small companies is closing.
Amazon Web Services (AWS) is a great example of this. The pricing strategy of AWS allows any company, no matter their size to purchase the cloud server capacity they need at very good prices.
A start-up can spin up a couple of small or medium servers for all of their development needs and at the same time a large business might spin up 1000 large servers for their development needs.
But AWS goes a step beyond just being able to cater for different sized businesses – it effectively encourages growth within those businesses. By having a pricing model that allows flexibility and scalability as a key part of the offer, businesses can choose to use AWS in the confidence that as they grow, their hardware basically grows with them but with a minimal cost.
This model works for all sizes of business. For larger companies, a new product or project can prompt the need for more servers, whether it be for development and testing, storage or to run a live application and AWS allows them to scale up.
In the past, we might have seen service providers that choose to cater for a small business by offering them a small business package that isn’t suitable for a large business (a lack of scalability and flexibility). Or the opposite, service providers working with only companies over a certain size as they could offer them a more comprehensive deal that sees a larger return on investment.
As we have seen with AWS, the cloud is breaking these conventions and it means companies all over the world, no matter what the size, use the same software.
As cloud computing and cloud applications continue to expand into businesses of all sizes, many are taking on a model that allows for scalability. Pricing models are becoming more similar to those we see from Amazon.
The key to Amazon being able to cater for companies of all sizes is potentially down to price. A small company can afford to spin up a server and use it instead of pricey internal hardware. Amazon may not make a huge return on investment from a small company but because they are appealing to all, they are likely to be making a lot from the large organisations who provision hundreds and even thousands of servers that are on all of the time.
Interestingly though, there is the possibility that Amazon begin to make money from the start-ups and small businesses over time as they begin to grow and can continue to grow with AWS. As they provision more servers, Amazon begin to see a larger return on investment.
It’s a model that we could see from many other service providers in the future as it becomes a way to cater for and handle companies of all sizes and not put themselves out of reach from smaller companies or vice versa.
