I had an interesting discussion recently about whether PLM – Product Lifecycle Management is really what it says (how many users actually use the tool to manage through the entire lifecycle of a product, from cradle to grave – very few from my experience), and whether the acronym is even meaningful anymore.
In general, people often view acronyms with disdain, some secret collection of codewords to hide the truth, or worse to mask the writers actual knowledge, or to ensure only true members of the tribe can join the conversation.
When they are used properly, they are useful in technology to help aggregate different providers under a common tent, and to create a short-hand for a collection of attributes so that you kind of know what you’re getting. A few products in the software world with acronyms that came to have relatively solid meaning include ERP (enterprise resource planning) and CRM (customer relationship management)
So what about PLM?
The sad fact is that it never really got to full deployment status as an acronym (some would say as a technology as well, with less than 10% of manufacturers having deployed a system). Agile software was helping lead the charge to get it there in the late 90’s, but had a flame-out as they reached cruising altitude – first an aborted merger with Ariba, then a victim of the dot-com crash, never really getting their market swagger back and eventually getting sucked into the voracious acquisition monster known as Oracle.
By my estimate, fewer than 5,000 organizations have adopted PLM – against a backdrop of >100,000 that could easily gain advantage of having it in place. Excel still rules the market for what would constitute PLM in most organizations. So who will champion the development of the market definition for PLM?
Perhaps the fundamental problem is the lack of significant stand-alone players to define it as a market. At the lower end you have Arena Solutions, Omnify and Aras (among others), but no one with “name brand” recognition. Among the larger players, they have all been absorbed into larger software enterprises – either CAD-centric, or ERP players (Dassault, UGS/Siemens, Oracle). I think it is less likely they will define PLM as a unique market/acronym, and more likely it will be defined as an extension of the CAD environment, or the ERP environment. Very little incentive for them to champion a unified view of a stand-alone PLM market.
So, there are challenges with each and my personal favorite, Arena (where I used to be an exec), appears to be going away from the acronym altogether – look at their home page title header – BOM and ECO Software, and virtually no mention of PLM at all on the page. If you didn’t know they were in the PLM space (which I think they are), you’d hardly realize it.
In the end, does it matter? Well, if we’re hoping for mass adoption among the small to mid-size manufacturers, it will be harder for buyers to choose among the category players and will be pushed by either a CAD agenda, or an ERP agenda. In the end, they may decide that their existing solution (Excel, or maybe in the future Google Apps) is the best answer. I hope not …
Thursday, April 16, 2009
Wednesday, April 1, 2009
A few observations from the 2009 IDC Directions Conference
I recently had the opportunity to sit in on IDC’s annual Directions conference here in sunny Silicon Valley (the weather, not the economic climate is sunny). As you might imagine the global economic recession (or is it implosion?) was on everyone’s mind and permeated the presentations, discussions, and hallway conversations.
In one of the “main tent” presentations IDC presented their market projections, which they have need to adjust (downward) twice since last summer. Interestingly, they are still projecting overall growth in WW IT spending this year (a scant 0.5% growth, but growth nonetheless) but down significantly from pre-crash expectations of 5.9% year over year growth. They are even more bullish as we move into 2010 and beyond, with growth of 4.4% expected next year. I hope they’re right.
The interesting message underlying this growth was where they are expecting it to come from. It's probably not a surprise that emerging economies (e.g. Brazil, China, SE Asia, India, Russia, etc.) are going to outpace the mature economies in uptake. What might be a surprise is that there are more incremental total dollars of spending increase from these countries over the next 3 years than mature economies – not just a higher growth rate, but actually greater absolute increases. The message is clear, get the appropriate visa’s in your passport if you want to grow your business in the next few years.
As you might expect, I spent a fair amount of time in presentations regarding SaaS and cloud computing – it was hard to miss, it was a major focus of the conference. The celebrity speaker for the event was Nicholas Carr, the author of “The Big Switch” with a nice, high level presentation on the transformation underway to cloud computing. He had a great analogy to the early days of electricity (and some great old pictures!) where companies used to produce their own power locally until the advent of centralized power plants and effective distribution systems. Very compelling arguments for the parallels to today’s emergence of “cloud computing” and SaaS applications.
SaaS was on IDC list of “hot technologies” for 2009 (if anything can be considered “hot” this year) along with some other interesting areas for growth this year including, enterprise social media, IT outsourcing, internet advertising, and a few others. Unfortunately for my friends in a few of the traditional software spaces I have known and loved, they had ERP, manufacturing software, and large enterprise IT on their cold list. I would guess that given the economic climate, that would be Bemidji level cold for this year.
Perhaps as an indicator of SaaS being “hot” this year was the fact that in their twice revised forecasts, they actually INCREASED their projections for SaaS revenues over the next three years in range of about 15%, adding $8.4B of spend over that time horizon to their forecast. They attributed this to the economic conditions favoring the SaaS model and helping to overcome some of the resistance to adoption. I recently did an analysis (available in this presentation), which showed the public SaaS companies far outstripping the growth rates of traditional companies, even in the downturn. SaaS is definitely the right place to be, right now.
SaaS reached it’s 10 year anniversary this year (if you take the founding of Salesforce.com to be the inaugural event), and IDC declared that the market is now “crossing the chasm”. This is when it becomes “safe” for more mainstream enterprises to look at adoption of an emerging technology. According to their “IDC Enterprise Panel” study, 23-25% of enterprises are now widely using SaaS for collaborative and business applications, projected to grow to 34-46% over the next three years. I think it safe to go into the water now …
In one of the “main tent” presentations IDC presented their market projections, which they have need to adjust (downward) twice since last summer. Interestingly, they are still projecting overall growth in WW IT spending this year (a scant 0.5% growth, but growth nonetheless) but down significantly from pre-crash expectations of 5.9% year over year growth. They are even more bullish as we move into 2010 and beyond, with growth of 4.4% expected next year. I hope they’re right.
The interesting message underlying this growth was where they are expecting it to come from. It's probably not a surprise that emerging economies (e.g. Brazil, China, SE Asia, India, Russia, etc.) are going to outpace the mature economies in uptake. What might be a surprise is that there are more incremental total dollars of spending increase from these countries over the next 3 years than mature economies – not just a higher growth rate, but actually greater absolute increases. The message is clear, get the appropriate visa’s in your passport if you want to grow your business in the next few years.
As you might expect, I spent a fair amount of time in presentations regarding SaaS and cloud computing – it was hard to miss, it was a major focus of the conference. The celebrity speaker for the event was Nicholas Carr, the author of “The Big Switch” with a nice, high level presentation on the transformation underway to cloud computing. He had a great analogy to the early days of electricity (and some great old pictures!) where companies used to produce their own power locally until the advent of centralized power plants and effective distribution systems. Very compelling arguments for the parallels to today’s emergence of “cloud computing” and SaaS applications.
SaaS was on IDC list of “hot technologies” for 2009 (if anything can be considered “hot” this year) along with some other interesting areas for growth this year including, enterprise social media, IT outsourcing, internet advertising, and a few others. Unfortunately for my friends in a few of the traditional software spaces I have known and loved, they had ERP, manufacturing software, and large enterprise IT on their cold list. I would guess that given the economic climate, that would be Bemidji level cold for this year.
Perhaps as an indicator of SaaS being “hot” this year was the fact that in their twice revised forecasts, they actually INCREASED their projections for SaaS revenues over the next three years in range of about 15%, adding $8.4B of spend over that time horizon to their forecast. They attributed this to the economic conditions favoring the SaaS model and helping to overcome some of the resistance to adoption. I recently did an analysis (available in this presentation), which showed the public SaaS companies far outstripping the growth rates of traditional companies, even in the downturn. SaaS is definitely the right place to be, right now.
SaaS reached it’s 10 year anniversary this year (if you take the founding of Salesforce.com to be the inaugural event), and IDC declared that the market is now “crossing the chasm”. This is when it becomes “safe” for more mainstream enterprises to look at adoption of an emerging technology. According to their “IDC Enterprise Panel” study, 23-25% of enterprises are now widely using SaaS for collaborative and business applications, projected to grow to 34-46% over the next three years. I think it safe to go into the water now …
Thursday, March 19, 2009
BMA SaaS Presentation -- Good Questions and link to the Presentation
I gave my talk today at the Business Marketing Association monthly breakfast roundtable (sold out ☺) and had a lot of great questions. I thought it would be worthwhile to share a few and give my perspective:
Q. Is the standard practice for SaaS vendors to have a methodology for customers to get their data back should they switch vendors, or their vendor goes belly up?
A. My experience suggests that most providers are pretty far along in supporting this and, at the high level, have various methodologies to export the core data in a variety of forms and formats. The reality of what you might do with this data is a bit trickier – some of the data and/or metadata might in fact be in a data model that doesn’t have an equivalent in another system. Think about a purchase order approval process where the SaaS system records everyone’s vote, their comments, and maybe other data. The odds of another vendor supporting this exactly – about zero.
Q. For an early stage SaaS company, and given the current economic climate, how do you convince customers to trust that you’ll be around after the tsunami passes to support their needs?
A. I actually think this one is not too challenging, at least compared to other early stage companies/products. ALL early stage companies face this question, and there are certain customers who don’t belong with these companies at an early stage (get them out of your pipeline!). For those that are more comfortable with early stage companies and products, the SaaS model with a recurring revenue stream provides a “backstop” to the “afterlife” of a SaaS company. Assuming the SaaS vendor has built up an appreciable customer base and renewable revenue stream, the reality is that someone (investor or an individual owner) will be willing and motivated to keep serving these customers. Earlier stages than this, you should only be selling to your true believers.
Q. What is the role of the channel relative to SaaS companies?
A. I think this is a fascinating area for further study (a future blog post, maybe?). My opinion is that SaaS companies have yet to scratch the surface on what to do, and they ignore this at their peril. As an example, Microsoft has over 500,000 partners in their network pushing their solutions. Say what you will about the machine in Redmond, that’s a lot of people out their advocating your approach to solving customer needs. SaaS companies need to either create a new channel or figure out how to co-opt players out their today, but not doing anything will, in the long term, limit their potential. That said, for earlier stage companies trying to figure this out before you get your solution nailed, your first customer base built, and your value proposition crystal clear can be a recipe for disaster.
If you’re interested in getting a copy of the presentation, it’s available for download here.
Q. Is the standard practice for SaaS vendors to have a methodology for customers to get their data back should they switch vendors, or their vendor goes belly up?
A. My experience suggests that most providers are pretty far along in supporting this and, at the high level, have various methodologies to export the core data in a variety of forms and formats. The reality of what you might do with this data is a bit trickier – some of the data and/or metadata might in fact be in a data model that doesn’t have an equivalent in another system. Think about a purchase order approval process where the SaaS system records everyone’s vote, their comments, and maybe other data. The odds of another vendor supporting this exactly – about zero.
Q. For an early stage SaaS company, and given the current economic climate, how do you convince customers to trust that you’ll be around after the tsunami passes to support their needs?
A. I actually think this one is not too challenging, at least compared to other early stage companies/products. ALL early stage companies face this question, and there are certain customers who don’t belong with these companies at an early stage (get them out of your pipeline!). For those that are more comfortable with early stage companies and products, the SaaS model with a recurring revenue stream provides a “backstop” to the “afterlife” of a SaaS company. Assuming the SaaS vendor has built up an appreciable customer base and renewable revenue stream, the reality is that someone (investor or an individual owner) will be willing and motivated to keep serving these customers. Earlier stages than this, you should only be selling to your true believers.
Q. What is the role of the channel relative to SaaS companies?
A. I think this is a fascinating area for further study (a future blog post, maybe?). My opinion is that SaaS companies have yet to scratch the surface on what to do, and they ignore this at their peril. As an example, Microsoft has over 500,000 partners in their network pushing their solutions. Say what you will about the machine in Redmond, that’s a lot of people out their advocating your approach to solving customer needs. SaaS companies need to either create a new channel or figure out how to co-opt players out their today, but not doing anything will, in the long term, limit their potential. That said, for earlier stage companies trying to figure this out before you get your solution nailed, your first customer base built, and your value proposition crystal clear can be a recipe for disaster.
If you’re interested in getting a copy of the presentation, it’s available for download here.
Friday, March 6, 2009
Creekside Upcoming Speaking enagagement
A little shameless promotion of an upcoming event. I will be speaking at the upcoming Business Marketing Association breakfast series regarding lessons learned from SaaS marketing:
SaaS (Software-as-a-Service) Marketing and Sales Success Factors
The advent of Software-as-a-Service has changed the rules in the software industry, resulting in very different approaches for marketing and sales. At the March 19 NorCal BMA Product Marketing Roundtable, learn from veteran business strategist Mark Holman about the strategies and tactics SaaS marketers have employed and what the implications are for other B2B businesses.
Although SaaS businesses have unique characteristics, many of the approaches they have taken can be adapted for marketers in traditional software companies, as well as all B2B products and services. In addition, SaaS can learn some lessons from more established businesses as their model becomes more prevalent in enterprise software.
Come to this engaging discussion to learn:
How SaaS has redefined the rules of the game in the software industry Inside secrets of marketing that SaaS vendors use to disarm the competition Tips and tricks the successful SaaS companies have used to attract customers in a down market Five practical tactics from SaaS that can be applied in any B2B business Possible chinks in the armor of the SaaS vendors as they strive to rule the industry
Date/Time:
Thursday, March 19th
8:30 a.m. to 10:00 a.m.
Location:
Scott's Seafood Restaurant and Grill
855 El Camino Real
Town and Country Shopping Center
(Embarcadero and El Camino)
Palo Alto, CA 94301
(650) 323-1555
If you are interested you can register at the BMA website -- here.
SaaS (Software-as-a-Service) Marketing and Sales Success Factors
The advent of Software-as-a-Service has changed the rules in the software industry, resulting in very different approaches for marketing and sales. At the March 19 NorCal BMA Product Marketing Roundtable, learn from veteran business strategist Mark Holman about the strategies and tactics SaaS marketers have employed and what the implications are for other B2B businesses.
Although SaaS businesses have unique characteristics, many of the approaches they have taken can be adapted for marketers in traditional software companies, as well as all B2B products and services. In addition, SaaS can learn some lessons from more established businesses as their model becomes more prevalent in enterprise software.
Come to this engaging discussion to learn:
Date/Time:
Thursday, March 19th
8:30 a.m. to 10:00 a.m.
Location:
Scott's Seafood Restaurant and Grill
855 El Camino Real
Town and Country Shopping Center
(Embarcadero and El Camino)
Palo Alto, CA 94301
(650) 323-1555
Pricing:
$15 BMA members / $30 non-members*
Thursday, March 5, 2009
I'm Back ... Launching Creekside Consulting
Well, after a long hiatus I have resurrected my blog as I officially launch Creekside Consulting. After dabbling in consulting for the past 12 months, I've decided to push forward and begin the creative process of starting something new. I found after taking a 15 year break from consulting (!) that I really enjoyed working with people grappling with strategic issues, and after having "been on the other side" I felt I could be a much better advisor. After thinking it through a bit, I decided to formalize what I've been doing -- hello world, here's Creekside Consulting (www.creeksideconsultinggroup.com).
I plan to spend the coming months honing in on the areas I feel I can provide the most value, my initial focus will include strategic support for business planning, M&A, innovation and operations -- with a strong emphasis on software and outsourced manufacturing. I've done a lot of work recently in SaaS and have a fair amount of interest already there, as well everybody is grappling with challenges in their supply chain and I'm there will be things to do in that realm.
So, I plan to post more frequently than once/year, come back and see what we're up to! Of course, if I could be of strategic assistance don't hesitate to contact me at Mark@creeksideconsultinggroup.com.
I plan to spend the coming months honing in on the areas I feel I can provide the most value, my initial focus will include strategic support for business planning, M&A, innovation and operations -- with a strong emphasis on software and outsourced manufacturing. I've done a lot of work recently in SaaS and have a fair amount of interest already there, as well everybody is grappling with challenges in their supply chain and I'm there will be things to do in that realm.
So, I plan to post more frequently than once/year, come back and see what we're up to! Of course, if I could be of strategic assistance don't hesitate to contact me at Mark@creeksideconsultinggroup.com.
Wednesday, January 23, 2008
Notes from IDC 2008 Software Predictions
I had the opportunity to sit in on a presentation in Silicon Valley today from the software team at IDC and what they see for 2008. It was interesting to note that they began the presentation with a discussion on macro-economic trends (not too good) and then went into the predictions without given much thought into how the current economic *challenges* might affect the year and beyond. A little bit of acknowledgement that since a vast majority of enterprise software investment still occurs in the Developed Economies, that a slow down could hurt software investment. Think back to 2002, any IT project that wasn’t essential, didn’t have a very short term ROI, and could be avoided was – yes, it was avoided! So, “if” we do cave economically, hold on to your seat belt, because IT spending is going to see a tightened belt. That said, tighter budgets play well into either applications that help generate revenue or reduce costs, and for models that don’t require a big upfront investment (like SaaS/on-demand).
On to the key trends. At an overall level IDC feels that three key trends are top of mind for 2008: Consolidation, Focus on mid-market, and Virtualization. Clearly the consolidation wave continues (bye, bye BEA) and this will begin to play out increasingly in niches as most of the major footprint areas have already succumbed. Mid-market shouldn’t be a surprise (after all there are only 500 companies in the Fortune 500), and most of the major vendors have declared this to be a key focus (except Oracle who doesn’t seem to see enough $$’s here, evidenced by abandoning Agile Advantage in mid-market PLM). Virtualization is interesting, clearly everyone is enamored with VMWare’s IPO, but the real impacts are now starting to ripple through the landscape. Software vendors with per/CPU models are going to have to completely rethink pricing and the big guys are all trying to figure out their strategies in a virtual world.
Diving in a level deeper they spoke about some key trends in the application space. A few I thought were interesting. They spoke about how the social networking space will make it’s way into the enterprise, with over 20% of enterprises using or piloting these applications already. Most people think about Linked-In as the “cross-over” between theses two worlds (I’m not ready for Facebook meets Linked-In), but they see this going beyond this into partner networks, customer networks, etc. To some degree this is the promise of PLM and other collaborative applications, but it could go beyond this into horizontal communities that don’t have natural forums.
They declared 2008 as the year SaaS goes mainstream. Well, I thought it was already there with Salesforce at 38,100 customers, Netsuite and SuccessFactors’ blockbuster IPO’s, Duffield coming back with Workday and SAP’s Business byDesign. With the big guys jumping in over the past few years it looks like “safe water” for everyone to jump in the pool. Although I must admit that I was surprised when they said that of all the software sold only 3% (yes, that’s THREE Percent) is SaaS/on-demand software. Even though I think this understates SaaS (you really need to multiple the SaaS figures by 3-5x to put them on comparable footing with perpetual license models), it still shows the huge opportunity still in front of the model. I did find it humorous that they (the IDC folks) expressed concern of the big guys all fighting over the 3%, I guess they can’t imagine that everyone shifting some element of their model to SaaS might actual GROW the penetration of SaaS.
Of note, something they mentioned that is worth considering. They spoke of the potential for appliances to compete with the SaaS model. It’s an interesting thought where a customer could buy an application appliance install it behind their firewall (or theoretically in the cloud if they wanted) and receive the continual updates / patches/ etc. without maintenance on their side. It could be a simpler way for some companies to offer some of the same/similar value propositions as on-demand without have to jump all the way in, and alleviates some of the concern companies have about “losing control” of their data. It’s an approach I haven’t seen with much real traction yet (Cast Iron is making some inroads), but one I’m going to spend a little more time exploring.
My favorite from the day was a gratuitous discussion of Second Life. They said this year will be a year of experimentation for Second Life in the enterprise, but it won’t really lift off this year. Ok, maybe I’m an old curmudgeon, but I honestly don’t see Second Life as the answer to every (or any) B2B marketer’s needs or for collaboration in the enterprise. Maybe I need to get an avatar and check it out …
On to the key trends. At an overall level IDC feels that three key trends are top of mind for 2008: Consolidation, Focus on mid-market, and Virtualization. Clearly the consolidation wave continues (bye, bye BEA) and this will begin to play out increasingly in niches as most of the major footprint areas have already succumbed. Mid-market shouldn’t be a surprise (after all there are only 500 companies in the Fortune 500), and most of the major vendors have declared this to be a key focus (except Oracle who doesn’t seem to see enough $$’s here, evidenced by abandoning Agile Advantage in mid-market PLM). Virtualization is interesting, clearly everyone is enamored with VMWare’s IPO, but the real impacts are now starting to ripple through the landscape. Software vendors with per/CPU models are going to have to completely rethink pricing and the big guys are all trying to figure out their strategies in a virtual world.
Diving in a level deeper they spoke about some key trends in the application space. A few I thought were interesting. They spoke about how the social networking space will make it’s way into the enterprise, with over 20% of enterprises using or piloting these applications already. Most people think about Linked-In as the “cross-over” between theses two worlds (I’m not ready for Facebook meets Linked-In), but they see this going beyond this into partner networks, customer networks, etc. To some degree this is the promise of PLM and other collaborative applications, but it could go beyond this into horizontal communities that don’t have natural forums.
They declared 2008 as the year SaaS goes mainstream. Well, I thought it was already there with Salesforce at 38,100 customers, Netsuite and SuccessFactors’ blockbuster IPO’s, Duffield coming back with Workday and SAP’s Business byDesign. With the big guys jumping in over the past few years it looks like “safe water” for everyone to jump in the pool. Although I must admit that I was surprised when they said that of all the software sold only 3% (yes, that’s THREE Percent) is SaaS/on-demand software. Even though I think this understates SaaS (you really need to multiple the SaaS figures by 3-5x to put them on comparable footing with perpetual license models), it still shows the huge opportunity still in front of the model. I did find it humorous that they (the IDC folks) expressed concern of the big guys all fighting over the 3%, I guess they can’t imagine that everyone shifting some element of their model to SaaS might actual GROW the penetration of SaaS.
Of note, something they mentioned that is worth considering. They spoke of the potential for appliances to compete with the SaaS model. It’s an interesting thought where a customer could buy an application appliance install it behind their firewall (or theoretically in the cloud if they wanted) and receive the continual updates / patches/ etc. without maintenance on their side. It could be a simpler way for some companies to offer some of the same/similar value propositions as on-demand without have to jump all the way in, and alleviates some of the concern companies have about “losing control” of their data. It’s an approach I haven’t seen with much real traction yet (Cast Iron is making some inroads), but one I’m going to spend a little more time exploring.
My favorite from the day was a gratuitous discussion of Second Life. They said this year will be a year of experimentation for Second Life in the enterprise, but it won’t really lift off this year. Ok, maybe I’m an old curmudgeon, but I honestly don’t see Second Life as the answer to every (or any) B2B marketer’s needs or for collaboration in the enterprise. Maybe I need to get an avatar and check it out …
Tuesday, January 15, 2008
SaaS is a future of software
Or was I supposed to say THE future of software? Even though I’ve been at it for the last seven years, I’m not ready to declare a world where all software is delivered over the internet. At least not in time horizon’s that make sense for most of us. I’m a true believer in the power of on-demand / software as a service / SaaS / cloud computing / “enter your own marketing name here” software. Without question it is a much better way to buy most software – unless you happen to like installing your own software, maintaining bug fixes, responding to middle of the night emergencies, etc.
However, there are many reasons to not buy your software as a service. If you absolutely need offline access to your applications, you have big huge data files (like a CAD drawing in native geometry), you’re under some sort of strict government controls for data management (e.g. ITAR), or you feel the need to mold the software to meet the exact business process you want to implement – then you better be looking at classic client/server based software. Just be prepared for a lot of extra work, and a likely 5-10x upfront investment in software, hardware and a dramatic professional services engagement to get what you want. For large Fortune 2000 companies who are seeking competitive advantage with the business process under consideration, this might be the right answer.
For everyone else, SaaS is probably the right way to go for most applications. And it should get to be even more “right” as time goes on. Watch how the SaaS vendors embrace platform approaches (e.g. Salesforce.com) to enable customization of applications, as providers build out better API’s/SOA approaches to enable access to data and workflows, and the applications grow in their breadth. Then your decision to go SaaS will look even better. I think the most exciting wave of developments in SaaS are still on the horizon, as data moves more seamlessly between applications and business processes span organizational boundaries (see how PLM is used in an outsourced manufacturing model) the power of an internet delivered application will grow even higher.
Where to look for this innovation? Well, don’t look at the traditional large players. They have too much entrenched in their existing architectures and more importantly in their existing sales and marketing models to really adopt a new way of doing business. When they’ve tried, they’ve failed. Siebel killed not one, but two on-demand attempts. And Oracle is in the process of killing off Agile’s half attempt at on-demand PLM. What will happen as SAP tries to wade into these waters? Good question. Can’t wait to see how that movie turns out.
So, I do believe SaaS is a future of software, one that will find an ever growing community of happy users.
However, there are many reasons to not buy your software as a service. If you absolutely need offline access to your applications, you have big huge data files (like a CAD drawing in native geometry), you’re under some sort of strict government controls for data management (e.g. ITAR), or you feel the need to mold the software to meet the exact business process you want to implement – then you better be looking at classic client/server based software. Just be prepared for a lot of extra work, and a likely 5-10x upfront investment in software, hardware and a dramatic professional services engagement to get what you want. For large Fortune 2000 companies who are seeking competitive advantage with the business process under consideration, this might be the right answer.
For everyone else, SaaS is probably the right way to go for most applications. And it should get to be even more “right” as time goes on. Watch how the SaaS vendors embrace platform approaches (e.g. Salesforce.com) to enable customization of applications, as providers build out better API’s/SOA approaches to enable access to data and workflows, and the applications grow in their breadth. Then your decision to go SaaS will look even better. I think the most exciting wave of developments in SaaS are still on the horizon, as data moves more seamlessly between applications and business processes span organizational boundaries (see how PLM is used in an outsourced manufacturing model) the power of an internet delivered application will grow even higher.
Where to look for this innovation? Well, don’t look at the traditional large players. They have too much entrenched in their existing architectures and more importantly in their existing sales and marketing models to really adopt a new way of doing business. When they’ve tried, they’ve failed. Siebel killed not one, but two on-demand attempts. And Oracle is in the process of killing off Agile’s half attempt at on-demand PLM. What will happen as SAP tries to wade into these waters? Good question. Can’t wait to see how that movie turns out.
So, I do believe SaaS is a future of software, one that will find an ever growing community of happy users.
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