The following is an excerpt from the March edition of Mortgage Technology magazine. To read the full story and much more,
In the near term, “increasing tension between vendors’ insatiable demands for revenue and buyers’ pressing need to cut non-value-adding maintenance expense, coupled with technology changes such as cloud and mobility” are forcing vendors to change long-standing policies, according to Forrester Research analyst Duncan Jones.
Today, corporations have plenty of “real alternatives to their incumbent vendors,” Jones wrote, stating flatly, “cloud and mobility kill deployment-based licensing.”
It’s a concept that’s been growing for some time. Service-oriented architectures will be the norm for both vendors and users, and some analysts envision large enterprises using SOAs to have full control of leveraging the value from software.
“We’re moving almost completely to SaaS,” said Kevin Marconi, chief operating officer of United Fidelity Funding. “We even got rid of Outlook on the desktop. SaaS is the way to go.”
There is no doubt that commoditization via SaaS has drastically lowered software costs for small and midsize mortgage lenders. However, it’s difficult to get hard numbers on pricing models and trends because most of the industry’s software vendors and service providers are privately held entrepreneurial players.
Jeff Lebowitz, president of Bend, Ore.-based Mortech LLC, said his firm’s research continues to show that lender preferences on pricing models are “highly segmented.” Larger lenders continue to prefer fixed costs, he said, while the demand for variable, transaction-based costs is largely confined to the industry’s smaller players. Nevertheless, top-tier lenders do partner frequently with best-of-breed providers—in default technology, for example.
But the flexibility of transaction-based pricing is still what’s driving many technology decisions in the mortgage industry.
“I don’t know many people doing subscription; almost all prefer transaction-based,” said Scott Stoddard, CEO of Foothill Ranch, Calif.-based default-technology provider Quandis. “I think the only place where licensing will exist pretty soon is in core systems, which are relatively static. And eventually we will go away from that. Everyone is going to the cloud.”
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