News & Views

March 12, 2010 from Gartner – “Adoption of software-as-a-service core financial management applications by midsize organizations is growing. Evaluation teams should understand how other midsize companies have overcome the perceived objections to SaaS financial applications and should not discount this option…”

180 View – NetSuite has provided this complementary Gartner report for good reason as it adds more credibility to SaaS. However, I don’t think NetSuite would agree with everything in the report including “SaaS financial management applications are best suited at this time for midsize organizations with simple integration requirements that find the functionality meets their needs without customization.” NetSuite would say that they have many forms of customization available to their clients, which is true. However if you need customization that involves changing the source code, then NetSuite will not be appropriate.

April 21, 2010 from destination CRM – “In the nine years since its founding, NetSuite, a provider of business management software suites hosted in the cloud, has witnessed firsthand — and benefitted from — the software industry’s affair with cloud computing. In the early 2000s, pundits squabbled over the technology’s promise, whether enterprises would choose to access their information via a browser instead of through desktop software, if data was truly secure, and, lastly, if it was possible for businesses to make money with software-as-a-service (SaaS).

“Every myth that popped up was soon knocked down,” said NetSuite Chief Executive Officer Zach Nelson, at the company’s annual SuiteCloud partner conference here last week.

These days, however, an emerging new wave of cloud computing has brought with it a new wave of myths.” The myths are:

1. Complex processes don’t run in the cloud
2. Customization is the Achilles’ heel of cloud applications
3. Channels don’t exist for cloud applications”

180 View – I agree with one qualification and that is SaaS customizations are possible only outside of source code. Other SaaS concerns are:

• There is “the risk that data may be disclosed to the government of the jurisdiction in which their data is held by the vendor, possibly without their knowledge or consent. For example, the USA PATRIOT Act permits the U.S. federal government to seek a court order for disclosure of electronic records, often without permitting notice to the user.” For more, see “Canada: Peering Through The Cloud – Cloud Computing: Many Benefits But There Are Some Legal Issues To Consider” published January 26, 2010 (http://www.mondaq.com/canada/article.asp?articleid=92818)
• You may not find all the functionality you need as SaaS is relatively new compared to the more mature products available on a license basis.
• You need to consider SaaS costs over a long period of time to do a proper Total Cost of Ownership.
• SaaS is not as compelling for those organizations that already have IT resources and infrastructure in place for other applications.

March 31, 2010 from The Enterprise System Spectator – “…The overhead and expense, even with Lawson’s new offering on Amazon’s cloud, will be far above what SaaS providers experience. True multi-tenant SaaS providers, such as Salesforce.com and NetSuite, make changes once, and the entire customer base experiences them instantly. This is especially a benefit to users of HRM and financial management systems (two of Lawson’s horizontal sweet spots), where regulatory changes are not optional…”

 180 View – There are really 3 different delivery models for software:

1. On Premise (Software is installed and run on customer’s hardware)
2. On Demand or SaaS (Customer accesses a single instance of the software over the web that allows multiple customers to coexist by a multi-tenant architecture)
3. Hosted (Software is accessed on demand, but lacking a multi-tenant architecture and requires separate servers and installs for each customer)

The author of the article believes that SasS is the future and Lawson better adapt it or it will be eaten by competitors such as Workday and Intacct. I think that there is a place for all 3 models. Hosted makes more sense than SaaS for organizations that don’t want their system updated with everyone else.

April 21, 2010 from Datamation – “I’ve been talking about the benefits of Software-as-a-Service (SaaS) for so long it always amazes me when I have to go back to basics to help the uninitiated understand the fundamental benefits of today’s online, on-demand software solutions.  So, here’s my quick list of the top ten reasons why business and IT decision-makers should start taking advantage of today’s leading SaaS solutions…”

180 View – Although the author is clearly biased towards SaaS, he does make good points.

March 4, 2010 from TechCrunch– “Earlier today, Microsoft CEO Steve Ballmer gave a speech at the University of Washington where he said that the company was going “all in” with its strategy to move Microsoft products to the cloud…”

180 View – This is a big change in direction for Microsoft and just as it takes an ocean liner time to change direction, so will it take time for Microsoft to move to the cloud or SaaS.

February 22, 2010 from Computerworld -  “Once the final tallies for 2009 are in, analyst firm Gartner Inc. expects SaaS revenue to total $7.5 billion, nearly 18% higher than it was in 2008. Gartner projects that by 2013, SaaS spending will hit $14 billion. And in an exclusive Computerworld survey of 127 IT professionals, 42% of the respondents reported using SaaS in their organizations, for everything from CRM (40%) to HR (38%), e-mail (36%) and payroll (32%).

Relatively low start-up and implementation costs are no doubt driving SaaS adoption well beyond CRM services, but there’s more to it than that, users say. Just as important is that they typically get greater software functionality and more upgrades from SaaS vendors than they could ever manage with on-premises applications…

“With SaaS, you’ve basically got to adapt to the SaaS process. It’s a way to standardize, although there still tends to be a certain amount of debate about the processes we use.”

But like other users, Proudfoot says the primary benefit of SaaS is speed. “We were up and running within days of having the software available,” he says. “Following implementation, there’s nothing to do other than pay your subscription, log on and use it. But, of course, use does require adaptation of internal processes.”

180 View – The article starts with “Businesses are taking the plunge into budget-friendly software-as-a-service offerings for everything from recruitment to central ERP.” But there was very little in the way of ERP actually discussed in this article. It’s definitely not mainstream for ERP yet although it’s headed in that direction for the same reasons it has done so well with CRM.

The article does imply that there is less flexibility in business processes with SaaS, but that may be more a function of a particular product rather than SaaS itself. There are SaaS products that offer many levels of customization from simply renaming particular fields on a screen to developing completely customized screens with built in workflow logic based on specific events.

February 2010 from Joel Martin’s blog – “…In the customer’s eyes, the ‘hero vendors’ will offer a choice of how to deploy, support and integrate a mixed ERP environment that grows (and contracts) with the needs of the business. Successful ERP SaaS solutions will allow customers and their partners to invest in standards based technologies to amplify the usage of the commodity components (e.g. extending financial data to line of business professionals) in a format that ‘makes sense’ to their users. At the same time, more complex ERP SaaS solutions will be deployed to meet the needs of select requirements (e.g. discrete operations modules for pharmaceuticals). These SaaS solutions will be sought after as both on-premises and via the cloud….”

180 View – We included this article because 1) We liked the title, 2) Joel is a good resource for anyone interested in enterprise software, 3) Joel makes some good points that SaaS does not need to be just standard/commoditized business process (the chicken) but can also be used for more complex/customized business process (the duck). We don’t think that Joel was referring to lame duck.

December 22, 2009 from Forbes – “…Over the past year, cloud computing has captured significant attention of CEOs, CIOs and IT personnel alike, as businesses began to investigate the value of moving certain workloads to a cloud model. Facing mounting pressures to provide better services quickly, while reducing costs, many IT decision makers found the economics and capabilities of cloud compelling. Now with analyst firm Gartner’s recent proclamation that cloud computing is the number one technology in its annual “Top 10 Strategic Technologies” list, clear that 2009 marked the maturation of this emerging form of computing…”

180 View – When you read the article, you may have some doubts about the “maturity” of the cloud which is still changing shape with the recent introduction of private vs public clouds and open source vs proprietary interfaces.

August 28, 2009 from AMR Research written by Bruce Richardson– “Early last week, I spent a morning reviewing SEC filings and Seeking Alpha transcripts for the most recent earnings calls from Epicor, QAD, and NetSuite. I wanted to see how well the two on-premises vendors were doing relative to the ERP-in the-Cloud company. A quick note: Most readers think of vendors like NetSuite as a software-as-a-service (SaaS) or on-demand provider, but I’m going to use the cloud nomenclature, since the term is rapidly replacing the other descriptions in vendor presentations…

Since the start of economic downturn last September, on-premises vendors have been harder hit than their cloud brethren. This is especially true for ERP providers…”

180 View – Bruce Richardson provides useful insights as he follows the money to see how the ERP vendors are doing. He is also in direct contact with the executives of the leading enterprise vendors.

Bruce and the vendors appear to be pushing the cloud vs SaaS terminology. I only recently switched from calling it ASP (Application Service Provider) to SaaS although I thought ASP made more sense. I also prefer SaaS over cloud.

It does make some sense that it is easier for organizations to invest in SaaS as they don’t need to finance the full license and infrastructure cost. However, it may not make as much sense when using an NPV (Net Present Value) approach to cash flow over 10 years.

October 6, 2009 from Forbes – “If you believed everything you read, then some time in the next few months companies all across America will be shutting down their data centers, switching off their servers and transferring all of their data and storage tasks to a bookseller by the name of Amazon.com.

It’s called “cloud computing,” and it’s billed as this year’s Next Big Thing. The idea is that computing will become like electricity, a commodity that people needn’t bother to make themselves. A few big companies will run data centers that everyone else will tap into via the Internet. Amazon’s Web services were one of the first in this market, and it’s what many point to when discussing the topic…”

180 View – Click here to hear what The Rolling Stones had to say about getting off the cloud.

July 9, 2009 from eWeek – “A new survey by research firm Gartner found that businesses were relatively lukewarm to software as a service, suggesting that, despite the hype, these applications need more work in order to gain full acceptance within the enterprise. Those who declined to use SAAS cited high costs, difficulty with integration and failure to meet technical requirements as primary reasons…”

180 View – This article is a disservice to anyone considering SaaS. The survey could have been conducted with large firms with complex requirements. It could have been based on new products that have few clients. It could be that the clients that chose the SaaS did a poor job in understanding their requirements. Perhaps the respondents selected the systems based on hype. The reasons for not using SaaS per the article make no sense. SaaS can often save money if the costs of supporting the infrastructure and system are taken into consideration. Difficulty with integration is the same whether it’s SaaS or on premise systems. Failure to meet technical requirements sounds like a failure in the selection process.

March 11, 2009 from InfoWorld – “While it has tested the waters of on-demand software with its CRM Online application, Microsoft still has no plans to do the same for its Dynamics ERP (enterprise resource planning) product lines, according to a top company executive.

“We don’t see people saying, ‘Hey, I wish you had hosted ERP, give me that, or I wish you only had hosted CRM,’” said Kirill Tatarinov, corporate vice president of business solutions, during a question-and-answer session Tuesday at the Convergence conference in New Orleans….”

180 View – We wonder whether the problem with Microsoft and other vendors in not moving faster to on-demand software is more caused by the software itself. The article later points out that “Dynamics CRM 4.0 has a multitenant architecture, allowing a single server to run multiple instances of the application.” If Microsoft ERP systems also had a multitenant architecture, it’s likely they would offer it. The on-demand model makes a good business case for companies that don’t have the resources or infrastructure to support on-premise software.

January 30, 2009 from ZDNet – “…He says that mainstream adoption within small and medium-sized businesses is “accelerating” – and that 20 percent of enterprise IT workloads will be run “in the cloud” by 2013. This will lower operating costs, reduce IT staffs and cut down on carbon footprints, he says… By the end of 2010, in fact, he expects 70% of companies will have deployed at least one application in the service “cloud”…

180 View – It’s hard to find good stats on SaaS. The survey in this article is based on a survey of 150 chief financial officers with budget authority. So it’s not based on actual SaaS but planned adoption. It’s also based on a small number of companies. Nevertheless we agree that SaaS has become mainstream. There are currently few options for ERP SaaS but that will inevitably change as companies seek ways to reduce costs. The article ends with “70 percent of SAP’s installations of its R/3 set of business applications predate 1998.” Pre 1998 there were not that many ERP systems available and SAP was extremely successful in attracting companies especially those with Y2K fears. But it’s still surprising that 70% predate 1998.

August 19, 2008 from BusinessWeek – “Ever since veteran software entrepreneur Dave Duffield launched his new startup, Workday, a year and a half ago, people have wondered if it could become the next Salesforce.com (CRM). Marc Benioff, Salesforce.com’s chief executive, had shaken up the customer-relationship management software world and created a company with a market cap of $8 billion with an online service that replaces expensive and complex traditional software packages. Could Duffield and Workday do the same? Just now, there’s growing evidence they can…”

180 View – We think that it’s early days for Workday that will eventually challenge other products more than Salesforce including NetSuite and SAP Business ByDesign. Salesforce is primarily CRM and WorkDay includes accounting and HR. What’s interesting is that there is a lot of investment in the next generation of ERP, CRM, HR… systems using SaaS (Software as a Service).