Why do the traditional ‘Big ERP’ vendors seem to be scared of SaaS?
Back in August last year, Lawson CEO Harry Debes gave an extraordinary interview in which he claimed that the SaaS market would ‘collapse within 2 years’ and seemed confused between SaaS as a technology approach and a pricing methodology. He was clear that Lawson was actively avoiding a SaaS strategy.
Recently in an interview with Information Week, Bill McDermott, president and CEO of global field operations for SAP also tried to dismiss SaaS as a serious option for businesses, referring to the dangers of relying on “half-baked applications from unproven SaaS upstarts”. Recalling SAP’s 36 years of experience developing a “stable core” of enterprise software and a service-oriented architecture that makes it easy to add on third-party and custom applications, he claimed “It will take another 36 years for software-as-a-service vendors to do the same thing in the cloud”.
What unites these two companies, and their outbursts against SaaS is that both fall into what the market often refers to as ‘Big ERP’ - characterised by technologically ‘heavy’ systems that are slow to implement, hard to integrate with and extremely difficult to change or re-configure once implemented. Many organisations that we deal with would certainly argue about SAP being ‘easy to add on third-party and custom applications’.
Clearly both are threatened by the SaaS movement. The inherent speed of development, flexibility and ease of deployment contrast sharply with the experience of ‘Big ERP’ users. These critics make the mistake of assuming that because many early applications have been relatively trivial or functionally shallow – which, let’s face it, they mostly have - that SaaS applications can never be ‘enterprise strength’. As representatives of traditional business software vendors, they seem to struggle with the concept of mixing SaaS and traditional software.
Hard for the traditionalists
The SaaS market is still relatively new but Salesforce.com, recognised by many as the flagship of the SaaS market, has proved over nearly 10 years it can deliver value, be secure and deliver enterprise level functionality to organisations of all sizes – something that is much harder to achieve in the traditional software world.
Like many technology innovations, the market has been awaiting the emergence of standards, particularly in the area of platform. The emergence of standard SaaS platforms – coined ‘Platform as a Service’ – such as salesforce.com’s Force.com, will provide a common infrastructure for new entrants to build all kinds of business applications. Like everything, some will argue that a reliance on a single platform provider has its risks. However, in this way applications can be built that talk to each other easily. It becomes feasible for users to adopt a business architecture from the bottom up with all the necessary applications up and running very quickly and cheaply.
The problem that has existed with many SaaS applications is that they have been built from the ground-up by vendors new to the on-demand market space. Often, this has meant that integration with other applications remains a problem and the lack of rich features inherent in on-premise applications has hampered efforts to drive SaaS adoption more widely. Many ‘Big ERP’ vendors will face this dilemma.
To date, no enterprise ERP vendor in the SaaS space has made a real impact on the market in the same way that companies like SAP and Agresso have in the traditional ERP software space. What we are seeing instead is a repeat of what happened with business software in the 90’s where a new raft of best-of-class applications is being born. This trend will never go away, as businesses have different requirements and specific systems that they need to support, but they will at least have the option to standardise on SaaS services on a single platform.
SaaS is an exciting approach and offers significant differences to other technology approaches. Ultimately, however, for us at Coda it is just another technology ‘platform’ - an alternative method of delivering our accounting systems expertise that sits alongside many other technologies past and present.
In the end it comes down to what is best for users, and what the clients want (not always the same thing!). All new technologies present challenges but enterprise strength cloud accounting is becoming a reality and in a lot less that 36 years!
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