Tuesday, April 28, 2009

SaaS industry 'will collapse' in two years!

Nindak niyare rakhiye, aangan kuti chhawaye;
Bin pani sabun bina, nirmal karat subhaye.

(Keep a critic near you in your backyard for they will help you cleanse yourself without soap and water)

A famous doha by Kabir, and shows the vision and mature thought the famous saint-poet had, which I think should be applied in all walks of life, to be able to see a situation from all possible viewpoints.

Applying the same approach to what I've been all praise for - SaaS, I found an interesting interview on the internet - an old interview, but a contrasting and bold comment made by CEO of a lesser known Enterprise app company -

The article reads "SaaS industry 'will collapse' in two years", and I really appreciate his viewpoint (and guts) in line with the same doha or adage that I said upfront. It is vital to have people who point to the possible negative aspects of a phenomenon currently sweeping the world of enterprise apps. Also he speaks from his experience and analysis and I think there are valid points in the statement too, which highlight the big risk the SaaS operators of the world sit on. Because in contrast to an on-premise world where there is no onus on the software company for maintaining the infrastructure/hardware or worry about its maintenance and upkeep - the SaaS vendors have to bother about all that - and also be on the firing line from the customer in case it is not managed well. Which actually can go to the extent of customers turning away from the SaaS vendor, as the contracts go year on year !

So, the risk that a SaaS vendor takes and the investment he makes upfront or on a regular basis - definitely is bigger than a software-as-a-product manufacturer's, which ultimately can also be a reason for its own death. But we all know that businesses revolve around the customer, and so is the case with this model - where the risk and investment that the vendor is making - is taken off the heads of the customer, which possibly is the key reason for its success too.

Now, with the prediction on SaaS industry going kaput in two years - we'll need to wait for another year to rule out entirely - as it's already been almost an year since the interview, and the SaaS market leader Salesforce.com has been going from strength to strength in that duration. The irony also is that the interviewee himself uses Salesforce.com! but he has a valid point again when he says that he uses it because the product is good, and not because its SaaS, and I agree again. Apart from the model - the key lies ultimately in the product being a good product. So you can do off shoring or outsourcing, but if you are not a good service provider - no one can help you from getting doomed. And so there would be many 'me-too' SaaS offerings, but the one that will stand out in the long run would be the best product, offering the best service at the best price.

So an interesting 'prediction' and viewpoint - but as long as the SaaS industry is in safe and able hands and keeps attracting bigger companies and better brains - I don't see a 'collapse' happening anytime in the near and far future. But critics, please keep those viewpoints coming, we need you in our backyard ! :-)


Animesh said...

obligatory comment: What about the Bahu industry?

Sid Mishra said...

@Animesh: thanks for the silly comment and do understand your keen interest ;-), but my blog on that is reserved till you get one for us! :P