Business application software and middleware vendors are addicted to exorbitant amounts of upfront money from perpetual licensing models to deliver their expected quarterly revenues. Enterprise software customers have no choice but to overspend absurd amounts of money on what business software is supposed to be as opposed to what it actually does for them. The result is a perpetual misalignment between business and information technology (IT). Software automation has become an expensive and risky capital investment. A metered usage-based pricing model for business software can transition the cost model for IT provisioning into a model where unit costs are directly tied to the value of the automated operations. However, the market must tackle a few issues before such a utility model can emerge:

• The existing middleware (i.e., software platform) technology that underlies business applications cannot provide a universal unit of consumption for usage-based metering. This is because middleware usage does not directly map into business process descriptions. Middleware is used to express and encapsulate application business logic through an object-oriented paradigm whose inner workings does not map very well to its process-oriented applications. A universal unit of consumption should apply to usage of the middleware; we cannot have usage-based pricing for applications that requires exorbitant amounts of upfront middleware licenses before you can even start using them. A paradigm shift in software componentization with SOA inside the application is enabling an inherently metered alternative to traditional middleware and software applications. This paradigm enables a software cost model with a universal unit of consumption analogous to the way electric utilities work.
• Large application vendors will resist the usage-based utility model unless they can offset the loss in revenue from upfront perpetual licensing fees by inequitably inflating the price of using the new utility model. There is no real solution to this except enabling a software supply chain where other business software and services vendors can emerge through equitably priced usage-based models.
• Customers will only accept the utility model if it is priced equitably to its operational benefit and it costs equal to or less than perpetual licensing for the perceived useful life of the software. Customer acceptance will follow fair pricing by software and services vendors who are not burdened by preserving old revenue streams and can compete in an open supply chain.