Harry Debes, CEO of Lawson, created quite a stir in an interview where he pronounced that SaaS would "collapse" in two years. Many others have weighed in on this including Vinnie Mirchandani, Jason Corsello, and Sarah Lacy. They make the case for why SaaS will last and is good for customers. One of Harry's arguments is that there has only been one really successful SaaS vendor, Salesforce.com. He says:
"An industry has to have more than just one poster child to overhaul the system. One day Salesforce.com will not deliver its growth projections, and its stock price will tumble in a big hurry. Then, the rest of the [SaaS] industry will collapse."
There are arguably other successful SaaS vendors (especially in HCM as Jason notes). However, Salesforce.com has been the poster child. Joshua Greenbaum, who has previously predicted that demise of Salesforce.com, had an interesting post where he discussed Harry's comments. He made an important point. There are other factors at play in the success or demise of Salesforce.com beyond just the SaaS model. However, he is not a big long-term believer in pure-play SaaS. Joshua believes the future is a hybrid model (vendors offering the customer a choice of delivery models).
As I have said previously, I believe there is no such thing as a SaaS industry or market. SaaS is a delivery model that is used in many different software markets. So, I disagree with Harry on that point. There is no industry to collapse. Joshua (as well as Harry) is right though that SaaS is not necessarily the best answer for all software markets. However, I believe Joshua comes to the wrong conclusion. I do not think the industry will move to the hybrid model. I think the industry will continue to have multiple models. Different markets have different requirements. Pure SaaS solutions may be appropriate for some and not for others.
There is nothing particularly wrong with multiple models from a customer perspective. In the HCM software market, I find that that most customers choose the best-fit application first, then they evaluate the delivery model choices. If SaaS is the only option from the best-fit vendor, then that is usually not an issue for customers. If the best-fit vendor offers multiple options, then customers choose the best one based on their needs. Harry's own experience with Salesforce.com is typical.
"We use Salesforce.com, and I like it. But I would've bought the product even if it wasn't SaaS. The success of Salesforce.com, in my opinion, has to do with their product being good, not because it's SaaS."
So, are you with Harry? Is SaaS over-hyped? Are you with Joshua? Is the pure-play SaaS model untenable in the long-term? I am on the record here and here (Gartner subscription required) as believing that SaaS usage will continue to grow. What do you think?
I received the following clarification today from Kathy Nottingham at Lawson providing additional color on its position on SaaS:
"While in APAC a couple weeks ago, Harry Debes was interviewed by ZDNet Asia. He made some bold, broad statements predicting the demise of SaaS which created quite a stir in the analyst/blog world. Harry stands by the general statement, but here are some points of clarification:
While Harry has strong opinions about the long term viability of SaaS, he and the rest of the Lawson organization are not trying to dictate application delivery options to the market, but rather respond to market demand. Travis White posted an "opinionizer" article on lawson.com clarifying Lawson's perspective on SaaS.
While we have not seen significant market demand for SaaS delivery/deployment options for our general ERP solutions, we have seen interest in SaaS solutions in the HCM space. Lawson is delivering SaaS HCM solutions to our clients and providing other deployment options as well. Larry Dunivan provides more Lawson perspective on SaaS in the HCM space in his latest blog posting:
Hopefully, these articles provide a more complete perspective on Lawson's SaaS position. If you have any questions about Lawson and pricing/delivery options that we offer to our clients, please contact me.