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by Ashwin

With information technology's continuous change in today's current business scenario, software has become as vital of an investment as hardware. As software prices are increasing with the advancing technologies, an old approach is fast gaining momentum, as the way to purchasing business applications. It's the concept of software as a service (SaaS), where a company leases or rents instead of buying business applications outright. In the new SaaS scenario, a software development company looks to an application service provider (ASP) or a hosting services company for it's business software requirements -- such as e-mail and calendar, or more advanced tools like workflow or Customer Relationship Management (CRM).

In the world of SaaS, service delivery providers set up a web location and offer a set of leased applications to software development companies. Employees there log in to use the software, and the service provider charges a recurring monthly fee for the software's use, based on number of seats and the degree of application functions and features the customer is using.

What is software leasing?

Software leasing can be equated to a loan for purchases that consist of 100% software or possibly software combined with training, installation or other products and services.

Software leasing is a smart and flexible solution to obtain costly software. Not only does software leasing offer the same benefits as traditional leasing, clients also have access, and can utilize the most modern software development solutions available in the market.

Primarily, software leasing services involves the user/client, who has to make payments as a monthly fee and is most commonly issued under a capital lease, in which the lease term is 75% of the property's estimated economic life. Under a software lease, individual parts such as the software licenses or even customization packages are available. Lower up-front costs, spread out terms, and no commitment to large cash payments when new software is needed allows a business to accurately forecast budgeting and provides necessary flexibility.

Software leasing world over is enabling software development companies to be more flexible, as it helps them to spread payments out over the term of the lease rather than have a large up-front cost to purchase outright. Software leasing is also a handy resource for software development companies that may not require a specific software for a longer term. Another feature that stands out is, a company can upgrade to newer version of the software during the lease period, but for this some service provider require a maintenance fee in addition to the subscription.

Software leasing also offers some key business benefits such as reduction in total cost of ownership, conservation of capital, preservation of existing credit lines and protection against obsolescence.

In a globally competitive scenario, software development companies are looking out for various ways to reduce the amount of capital tied-up in assets and instead direct it towards increasing it's competitiveness in the market. And, for this software leasing can be looked upon as a viable and effective business proposition.

About the Author

Author is a Marketing Executive with an Offshore Software Development Service provider located in India. The company deals in offshore software development and offshore outsourcing. For more detailed information about the company and it's services visit : http://www.otssolutions.com.


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