Phil Wainewright from ZDNet questions whether any company can afford to ignore Cloud or SaaS technology and remain loyal to their premise-based equipment.
He surmises that any company wanting to grow or change can’t justify spending exorbitant amounts of capital on rigid, slowly implemented and hard-to-update, costly equipment. I think you might be right there, Phil.
Summary: SaaS adoption is rife among fast-growing companies that want to adapt to change and stay up-to-date. That leaves conventional on-premise vendors competing for the laggards.
There’s a received wisdom that SaaS adoption is taking place among a subset of companies that face substantial change. SaaS makes sense if you need to move fast, grow quickly, adapt to rapidly changing markets or, in some cases, foreshorten the disruption of consolidation or downsizing.
In the ERP space, the latest expression of this trend is seen in the adoption of SaaS in subsidiaries of large companies that want to quickly accelerate their business in emerging markets or get better real-time information from regional operations running outdated legacy systems. Both SAP Business ByDesign and NetSuite OneWorld are targetting this opportunity. I’m at NetSuite’s annual conference this week (disclosure: travel and accommodation funded by NetSuite), where the company has been celebrating its penetration of Fortune 100 accounts with this strategy, including global brands such as Johnson & Johnson, Proctor & Gamble, MetLife and others.
The corollary of this line of thinking is that the rest of the market will remain with the conventional software vendors — SAP, Oracle, Infor, even Microsoft who, bless their hearts, believe Dynamics AX is going to pick up business from their on-premise rivals. So here’s the rub. Exactly how many organisations are there today who don’t face substantial change? Exactly how large is the market for new software among companies that are happy to move and grow slowly, whose markets aren’t changing so much or who have plenty of time to consolidate and downsize? How many multinational subsidiaries are going to be upgrading their ERP because they’re in slow-growing markets and don’t mind waiting another year before they bring real-time information streams online?
The fact is, the nature of business today is such that no one has time any more to wait and plan for a conventional multi-month or multi-year on-premise implementation. The market for the old way of doing things is dying and SaaS is capturing more and more of all the businesses that will thrive in the future.