Software Product Manager by Gopal Shenoy

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Saas model will collapse in two years – What?

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In a mind numbing interview with ZDnet, Lawson Software CEO Harry Debes made the prediction that Saas software model is bound to collapse in two years. Even if I try to put aside his opinion (however dumbfounded it is), what I cannot comprehend is how a CEO of a public company can call his customers stupid and that they are addicted to software like they would to cocaine. Read that again – stupid? cocaine?

In his interview, does he say anything about benefits to his customers that Saas brings to the table? It all seems to be a pitch on how beneficial on-premise software model is to the vendor – profitability, captive customers, switching costs etc. I wonder if Harry has a clue as to the pain points involved in installing and upgrading on-premise software? Maybe he should so that he can feel the pain of his stupid, cocaine addicted customers. Maybe companies like Google, Microsoft are all stupid too for having Saas models for delivering software.

While I totally agree that Saas is not the panacea to solve everything that is wrong with software, that many of the Saas vendors are not yet profitable, I cannot come to terms with him calling his prospective buyers stupid.

What is next to collapse Harry – social media?

3 responses to “Saas model will collapse in two years – What?”

  1. David Locke Avatar
    David Locke

    SaaS fits into the technology adoption lifecycle in the late market where price pressure dominates everything the vendor does. Even for a product company, making money in that market required huge amounts of cash, change, and cost elimination. It was never an easy place to do business.

    SaaS fits nicely with the notion that you have to sublimate your interface for the late market. Most product companies don’t bother and end up killing their offerings quickly once they enter this market. Still, are SaaS vendors even aware of what they are doing, or do we get the same kind of interfaces in a SaaS application that we used to see on the desktop. Ajax or not isn’t the point of the question. It’s a matter of de-feature-bloating. Even web apps have features. And, going one more step towards getting rid of software artifacts that are only involved in a task, because the task is being performed on the computer. Task sublimation requires more than a different user interface. The code will be more complicated regardless of form factor.

    When a vendor can’t make money, it stops being about the customer’s pain points. Go through a stall, if you live say thanks, don’t blame it on technology, because it won’t be about technology at all. BTW, all companies stall. CEOs say strange things on the way down.

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  2. Tyner Blain

    Is the SaaS Market Broken, or Just Efficient?…

    Is SaaS a broken model, with integral flaws, doomed to failure in the next two years?  Lawson Software’s CEO, Harry Debes, thinks it is.  Perhaps the structural elements of the SaaS reality just break Debes’ business models.

    Reports of …

    Reply
  3. Agile and SaaS « Lead on Purpose

    […] (e.g. Google and Salesforce.com). Gopal Shenoy takes on a critic who makes a prediction that the SaaS model will collapse in two years. He says: “While I totally agree that Saas is not the panacea to solve everything that is […]

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