I read ‘SaaS market will ‘collapse’ in two years‘, an interview with Lawson CEO Harry Debes and was stunned by it’s sweeping ignorance. I’m going to give him the benefit of the doubt and presume that some of this was taken out of contextÂ or thatÂ it was edited for maximum controversy, but still, what he says here is utter nonsense.
He cherry picks historical evidence on prior variations of outsourcing software services and ignores new macro forces. The result is that he simply looks foolish:
Q: All the other big players are going “on demand”. Is cloud computing the next big thing? Debes: This “on demand”, SaaS phenomenon is something I’ve lived through three times in my career now. The first time, it was called “service bureaus”. The second time, it was “application service providers”, and now it’s called SaaS.
But it’s pretty much the same thing. And my prediction is that it’ll go the same way as the other two have gone–nowhere.
SaaS is not God’s gift to the software industry or customer community. The hype is based on one company in the software industry having modest success. Salesforce.com just has average to below-average profitability.
People will realize the hype about SaaS companies has been overblown within the next two years.
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.
Won’t people avoid the mistakes of “previous” SaaS incarnations, as you mentioned? People are stupid. History has shown it repeats itself, and people make the same mistakes.
People are Stupid? Could he really have said that? Unbelievable.Â Harry, I can think of at least one case where weÂ agree.
He goes on to cite Larry Ellison’s point thatÂ ‘There’s no money is SaaS’Â and thatÂ SaaS is simply a ‘finance option’ that offers ‘exactly the same [experience] as SaaS’
I will admit that there are legitimate issues with the SaaS model. Specifically, customer acquisition costs can be prohibitive (which I wrote about here), and the payback is often measured in years. However,Â this convenientlyÂ ignoresÂ the fundamentalÂ demand issue that customers want low cost, lowÂ maintenance,Â easy to use solutions as well as the revolutionary changes taking place on the production and service deliver side.
You might be able to credibly argue the timing of the Big Switch, but to say it’s not going toÂ happening, or that SaaS is simply a ‘finance option’ is dinosaur thinking, pure and simple.