Software's Eve of Destruction
I've been one of several contributors to an interesting debate with Paul Stobart, CEO of Sage, on the Software as a Service (SaaS) topic in the pages of AccountingWEB. In the latest instalment Stobart denied that there was any great complexity in offering software as a service and argued, "The debate goes way beyond hosting. ASP/on-demand/SaaS is really a red herring to what's really going on". The rest of us have been arguing that SaaS isn't just an alternative delivery mechanism, certainly isn't a red herring, but is a major shift that traditional software houses will ignore at their peril. So it was interesting to read this piece by Kevin Kellerher on TheStreet.com. Read the full article, but some key quotes are:
"The whole software industry is being disrupted by the software-as-a-service approach," says Gordon Ritter, an Emergence partner and a former vice president at IBM. Ritter says that the rise of Salesforce.com came shortly before the decline of Siebel, and its subsequent purchase by Oracle -- and it's no coincidence."Salesforce.com is taking down Siebel and pulling biz from it. You have a giant coming to its knees with a start-up disrupting them with a better value proposition," Ritter says. "We see new entrants coming in with this software-as-a-service approach. We see a giant industry with disruptive forces hitting it."
I was also interested to hear this article refer to "creative destruction", the expression used by economist Joseph Schumpeter to describe his view of the process of industrial transformation that accompanies radical innovation.
In the AccountingWEB article Stobart also said "For people to say we haven't thought through the implications is doing us a disservice". I would guess that he does realise the disruptive forces that are at work, but can't say too much because of the various constituencies he has to keep happy. Dennis Howlett has done a good piece on the cash crunch for Sage in making the business model switch. Any traditional software company is going to be hard pressed to make the necessary changes to their model, stay profitable, and keep their original customer base and reseller community happy. These are definitely both creative and destructive times for the software industry, and it can only provide better value for the customer as the new order is established.
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posted by Unknown at 18:17
2 Comments:
I don't agree with the analysis that looks at a Siebel v Salesforce thing. Siebel was in trouble long before Salesforce started making hay.
I first met them in 2000, when Siebel was running like a train to apparent world domination at a time when Salesforce would pretty much give away user access.
Siebel's problem was one of failing to deliver. No more, no less. It wouldn't matter who was in the frame to compete, if you don't give value, you get screwed - eventually.
Today, Salesforce has problems of its own. Recent announcements look off to me.
What you say sounds valid, although I've seen the connection/comparison to Salesforce mentioned by several people. However, I agree wholeheartedly that the cost, length and lack of delivery on major Siebel projects must have been the key factor. But that doesn't invalidate the main theme of Kellerher's article on the disruptive forces at work.
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