I have been seeing a lot of blog posts recently about the current state and future of SaaS. Matt Tucker makes an intriguing argument about why single tenant is needed (and feasible) for SaaS based on the public cloud. Bob Warfield (Update: my apologies Bob, I must have had the Miami Dolphins on the brain) weighs in on the economics (economies of scale) of SaaS that argue for multi-tenancy instead of single tenancy on the public cloud. Finally, Josh Greenbaum believes that the debate between single tenancy and multi-tenancy will ultimately be moot (though I have to say I am not in love with the SaaS 2.0 term that Josh uses -- anytime someone coins a "2.0" anything I have an immediate negative reaction). Josh believes the debate is going to shift from SaaS being better, faster, cheaper to SaaS allowing the creation of new applications whose value proposition is defined by their ability to aggregate data and processes (and stakeholders) in the cloud.
In a sense, all three perspectives are right. It really depends on what business problem you are trying to solve and, as a vendor, what your value proposition is for customers. Some customers want solutions where they have the most control and can customize it to meet their specific needs. This is especially true if it is something that is strategic and competitive differentiating for the customer (and they would prefer to not build it from scratch). Different customers may choose to take that core solution and go an entirely different way. This vendor may never grow to the size of Oracle or SAP, but it is still a valid business model. Likewise, for some customers, better, faster, cheaper is well, better, faster, and cheaper. Josh is also right too. There are new application possibilities that can leverage processes across multiple enterprises and aggregate data from those enterprises in new and interesting ways.
That is not to say that one approach may not have a larger impact on software markets overall. Multi-tenant SaaS may be a discontinuous innovation in the Clayton Christensen sense and may continue to disrupt the power structures of many business application markets. However, it is not the only viable delivery model. All of the start up vendors I have seen for the past several years have had multi-tenant SaaS as their delivery model. I am waiting, and looking forward, to see some vendors with a different value proposition that provides a new and different spins on delivery models because of the customer business problem they are trying to solve.
This is a really good post (and links) about performance management. I do not think there is a one size fits all answer. Performance reviews can serve many purposes. It is important to understand what you want to impact (or not impact if you choose not to do them) and then make sure you align your strategy, processes, and technology to help achieve it.
Interesting data, but this is why workforce analytics is important. There are a lot of different interventions that you can use to lower cost, but it is important to understand what else it might impact (positively or negatively).
There is a fair amount of commentary in the blogosphere about Vista Equity Partnersproposed acquisition of SumTotal Systems (it already owns ~13% today). Some of the commentary decries the demise of the LMS. Others have focused on how the proposed acquisition reflects the impact of broader trends (for example, Social Software and SaaS). However, I believe that this is part of broader, more fundamental change to the HCM software market. When Bedford Funding (correction: I said Hellman & Friedman yesterday) (another PE firm) acquired Authoria, I noted that it was an inflection point:
The current economic climate will continue to put stress on vendors. It is likely we will see additional mergers and acquisitions. It is easy to forget that the Talent Management application market is still relatively early on in its life cycle. There are many large players out there that could change the dynamics significantly. Oracle and SAP have their own offerings, but have shown they are also willing to buy established, market-leading niche vendors. Other PE firms have already made investments in the HCM market (Hellman & Friedman/Kronos, Golden Gate Capital/Infor/Workbrain, KKR/NorthgateArinso). They, and other PE firms (including Bedford), are potential acquirers.
I did not mention Vista Equity Partners on the list specifically. I should have as they had already acquired Accero (formerly Cyborg) from Hewitt in January 2008. It also owns Zywave (a SaaS provider of employee benefits solutions - acquired in November 2008). The stress on vendors will continue in 2009 (we are just getting into Q1 earnings season so that will be a barometer for how difficult things may have become) and it would not be surprising to see additional acquisitions by private equity firms looking to take advantage of depressed valuations. There are still many mature HCM vendors (not just in talent management) out there with good sized customer bases that can be profitably operated and consolidated into larger entities. However, even newer, faster (though not as fast as they had been previously) growing vendors may not be immune from depressed valuations and acquisition offers. Get to know the names of these PE firms because they are becoming key players in the HCM software market.