RSSSaaS Myths – BW
BusinessWeek is carrying an article on the Myths surrounding SaaS and the author procides his views on the same, the author is Kaplan of ThinkStrategies. The list of Myths are:
Myth #1: SaaS is still relatively new and untested.
Myth #2: SaaS is just another version of the failed application service provider, or ASP, and hosting models of the past, and will suffer the same fate as its predecessors.
Myth #3: SaaS only relieves companies of the up-front costs of traditional software licenses.
Myth #4: SaaS is only for small- and midsize businesses and will not be accepted by large-scale organizations.
Myth #5: SaaS only applies to applications such as customer relationship management and salesforce automation.
Myth #6: SaaS will only have a minor impact on the software industry and will fade over time
Myth #7: It will be easy for the established software vendors to offer SaaS and dominate this market.
Excerpts from the same:
Software-as-a-service, or SaaS, has been spearheaded by Salesforce.com's (CRM) customer relationship management and salesforce automation applications, and NetSuite's "net-native" enterprise resource planning applications.These companies have recognized the inherent inefficiencies of the traditional software market, including the tremendous time, effort, and cost that organizations — especially large-scale midsize businesses — have to expend to install applications and keep them up and running.Despite the success of these companies, many people are still skeptical about the long-term success of SaaS. Others are concerned that recent Salesforce.com outages represent a fundamental fault line in the SaaS landscape.As someone who has consulted with a variety of SaaS users and vendors and manages a rapidly growing directory of SaaS players, which can be seen at saas-showplace.com, here's my response to some of the most common myths associated with SaaS.
- Salesforce.com has been in business over five years, has more than 399,000 subscribers at 20,500 companies worldwide, and is growing at about 80% a year.
- The oldest and biggest SaaS purveyor? ADP — the world's largest payroll application outfit — has been in business for nearly 60 years, generated $8.5 billion in revenues last year, and served about 590,000 clients worldwide.
- The ASPs and hosting companies of the dot-com era failed for two reasons. First, they did not fundamentally change the architecture of their software applications, but simply resold Legacy applications to organizations that didn't want to house them on their own systems. The up-front and ongoing costs of hosting legacy applications proved to be too much for the ASPs to withstand.The second reason the ASPs and hosting companies failed: Only a small segment of the market was willing to outsource their application needs to relatively untested outfits because most companies during the dot-com era felt that their IT operations and business applications were a strategic asset.Times have changed. Today's economic and competitive pressures make nearly any form of outsourcing fair game.
- Microsoft Chairman Bill Gates stated in an internal memo that became public last fall: "This coming 'services wave' will be very disruptive….Services designed to scale to tens or hundreds of millions will dramatically change the nature and cost of solutions deliverable to enterprises or small businesses."
