While on Twitter the other day, one of my favorite HR twitter users, Jason Averbook, posted a link to an article on the InformationWeek blog about the SAP CEO, Bill McDermott, predicting SaaS Disillusionment.
From the InformationWeek article:
Meantime, McDermott says SAP is positioned to gain share in the business applications market as IT departments scrutinize every dollar spent, while predicting that SaaS vendors will have a tough time living up to the high expectations that customers will place on them. SaaS implementations, he says, are “harder, more expensive, and riskier” than businesses anticipated, and he predicts a backlash as “disillusionment sets in.”
I think disillusionment comes when either SaaS vendors or SaaS customers don’t think through what they are doing. Software vendors rush out a SaaS offering without really architecting their software for true Multi-Tenancy delivery. Customers rush out and sign a contract with a SaaS Vendor thinking they will save money without actually determining if the vendor is offering their software services in a true SaaS Multi-Tenancy model. Months later everyone is unhappy and disillusionment sets in.
My understanding is that SAP did not architect their SaaS offering such that SAP and their customers would be happy with the service. Taking an existing ERP application and architecting for SaaS delivery is hard work and maybe even impossible to do. It is probably easer for SAP to sow the seeds of discontent regarding SaaS to protect their current ERP investment.
Potential SaaS customers need to involve both the business and IT groups to make sure the vendors they are evaluating are offering a SaaS model that fits their needs. This model might be ASP/Hosting, Single Tenancy or Multi-Tenancy SaaS. Each model has their strengths and weaknesses. Too often however the Business owner decides on a SaaS vendor based only on the functionality of the application and does not bring in IT resources to evaluate the actual SaaS model used by the vendor.
If you are a vendor or a customer disillusioned with SaaS, maybe you need to look within to determine if your disillusionment is of your own making.
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I have to agree that many organizations don’t take enough time to fully vet and understand the SaaS vendors solution before they ‘leap in’. But the SAP CEO’s comments are at best sowing some FUD, and at worst extremely hypocritical especially if they try to revive Business by Design. I really liked the post.