1. Get Solid, Believable Commitments From Microsoft, Oracle, And SAP.
The big software companies still have the upper hand, and SaaS won't destroy it. Rather, the success of SaaS in 2009 will depend on to how much support it gets from the established vendors.
So far, support of SaaS among the big three has been riddled with occasional missteps and self-contradictions, but this could change in 2009. SAP made a big deal out of the Business ByDesign SaaS ERP suite for midsize businesses it launched a year ago, but has since slowed down the rollout, saying it's having a difficult time making money off of it. In the coming year it plans to develop SaaS functionality modules that hook into customers' on-site SAP ERP systems, helping to protect its profitable software-licensing model while offering SaaS to customers in areas where it makes sense.
Microsoft this year released SaaS CRM and collaboration services. It's also planning a SaaS version of Microsoft Office, but details are vague. Like SAP, it's sticking to a "software plus services" approach, in hopes of keeping that traditional software revenue coming in. In sum, it's still unclear how Microsoft's SaaS strategy will play out.
Oracle offers a SaaS version of Oracle/Siebel CRM and promotes its databases and servers as a good infrastructure choice for SaaS software vendors, but hasn't ventured much into the application side of SaaS. CEO Larry Ellison has been vocally critical of the profitability challenges of SaaS, but he may be having a change of heart: During a quarterly earnings call with press and analysts in December 2008, Ellison specifically pointed to a large SaaS customer win over Salesforce.
The big three vendors are taking tentative and occasionally unsteady steps toward SaaS. If they are to be believed, however, the pace will pick up in 2009. And that's what SaaS will need to transition from niche to necessary.
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Reliability Is A Problem
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