Strategic CIO // Executive Insights & Innovation
Commentary
6/18/2010
10:26 AM
Bob Evans
Bob Evans
Commentary
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SaaS Industry Is Collapsing! And The Sky Is Falling.

In 1977, Digital Equipment Corp. founder Ken Olsen said, "There is no reason for any individual to have a computer in their home." Another prediction's not quite as atrociously bad but almost: 22 months ago, Lawson Software CEO Harry Debes said the SaaS industry will go "nowhere" and within two years "will collapse." But hey, he's not wrong just yet-he's still got two months to go.

In 1977, Digital Equipment Corp. founder Ken Olsen said, "There is no reason for any individual to have a computer in their home." Another prediction's not quite as atrociously bad but almost: 22 months ago, Lawson Software CEO Harry Debes said the SaaS industry will go "nowhere" and within two years "will collapse." But hey, he's not wrong just yet-he's still got two months to go.I came across this bit of historical arcana while reading a blog post about Lawson on Frank Scavo's "The Enterprise System Spectator" in which Scavo was talking about Lawson taking some tentative steps toward the cloud model.

Late in the piece, Scavo referred to Debes' dubious death proclamations for SaaS, which Debes made in an interview with ZDNet. Here's the excerpt from that interview that's coming back to haunt Debes (well, unless the SaaS industry disintegrates in the next 60 days):

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.

After reading that, it's clear to me that while you can hammer Debes on a lack of wisdom, you can't criticize the guy for being tentative.

But Debes wasn't done-in his answer to the very next question, he employed the time-tested psychological model of projection, wherein the speaker imparts to others the very quality that speaker has mastered:

Won't people avoid the mistakes of "previous" SaaS incarnations, as you mentioned?

Debes: People are stupid. History has shown it repeats itself, and people make the same mistakes.

Thanks for the wisdom, Harry.

RECOMMENDED READING:

Global CIO: 10 Indispensable Insights On Cloud Computing

Global CIO: Oracle's Larry Ellison Embraces Cloud Computing's 'Idiocy'

Global CIO: Will Salesforce.com's Soaring Stock Price Puncture The Cloud?

Global CIO: Can Jive Drive Social Business Software?

Global CIO: Oracle Layoffs Threaten Larry Ellison's Credibility

Global CIO: 10 Reasons CIOs Will Get Fired This Year

Global CIO: Google Derangement Syndrome Erupts Worldwide

Global CIO: Is Steve Jobs Blowing Smoke About Apple TV?

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