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.
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3 comments:
Hi, Mark! Thanks a lot for sharing your insights on SaaS. I do more than agree with you in reasoning why big players have failed in adopting the SaaS model. What strategies do you think the big players should take to be successful with this new business model?
John,
Frankly I think it's a challenge given the need to "fork" the code base (creating 2x development needs) and the inherent channel conflict (with existing sales team). That said, if I were to postulate an approach, it would be to dedicate a team, measure their success against SaaS players, and carve out rules of engagement versus the "enterprise" group (much like you would with a channel partner). Also, something I'm starting to look at is the possibility of an appliance approach (see my posting on the IDC trends). This might be a creative way for a traditional SW company to start down the path. -- Mark
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