Category: ERP
September 23rd, 2009
SaaS for your business in the cloud
Not to be smug, but SaaS is a great place to be in the software industry these days. I was talking to salespeople for several SaaS vendors and partners at a customer event a few weeks ago and there was a palpable sense of relief that they’d moved out of on-premise sales — one described to me a recent joiner’s event at his current employer where a dozen or so former Oracle high-fliers were coming on board. “These guys know all about following the money,” he commented.
Today, I’m at a NetSuite customer event in London and CEO Zach Nelson has just displayed a chart quoting IDC and Gartner data that shows on-demand ERP sales are growing at a rate four times faster than on-premise. OK, that’s from a lower base, but remember too that SaaS vendors book far less each year from each individual deal than their on-premise rivals, which makes their faster revenue growth even more impressive.
So I’m wondering, what’s driving this remarkable growth? Conventional wisdom says that it’s just lower upfront cost and faster time-to-live that’s driving businesses to adopt SaaS, especially in these straightened, cost-conscious times. But there’s another factor that I think is underrated and I’m interested to hear Nelson emphasize it in his presentation.
“So you’re going to build your business on software that was designed before the Internet existed?” he relates asking a customer in a recent sales call. Increasingly today, business is done in the cloud — with customers, suppliers, employees — and Nelson’s message is that, to participate fully in that medium, business systems have to be in the cloud, too. “Your company is in the cloud,” his presentation concludes.
The message is reinforced by Peter Bauer, CEO of Mimecast, which adopted NetSuite to manage its growth providing email management services as a multinational business. “You have to increasingly think of customers visiting your organization as an online experience,” he said, speaking on a customer panel at the event.
Perhaps more SaaS vendors should take a leaf out of NetSuite’s book. Instead of going on about the lower cost and faster time-to-live of their solutions compared to conventional software, they should just point out that operating in the cloud is how business is done these days, and anyone whose business systems operate anywhere else is going to get left behind. It’s as simple as that.
August 5th, 2009
Go cloud, young man
Several times recently, I’ve advised personal acquaintances who find themselves between jobs to investigate any opportunities to put their skills to work online. The rationale is simple. In an economic recession, everyone is looking for ways to save money, and therefore the growth sectors are those that help people and businesses do more with less — low-cost supermarkets and fast-food outlets, second-hand and discount traders, and the subject of this article: any online service that strips out excess costs through automation and remote access to administrative and professional expertise.
By and large, online is cheaper because it eliminates all the time frittered away moving information from one place to the next and moving people from one meeting to another. Imagine how much time is saved when a customer looks up data for themselves and then enters new information directly on an online form, instead of having to phone up and ask questions, then fill out a paper form and have someone re-enter that data on receipt. Think how many more people an adviser can deal with if instead of handling physical paper and attending face-to-face meetings, they can just pick up the phone to their client and discuss documents and data they’re both viewing online.
That time saved is a huge salary cost that an online provider no longer has to bear. It’s a cost burden that keeps prices high at conventional operators. Businesses that transfer custom from their old providers to go online no longer have to pay those inflated prices, so they save money. The online providers still make a profit on their lower operating costs, and as they grow they make even more money. Those cost savings and profits come at the expense of the people who are no longer employed on those wasteful, time-intensive manual processes and face-to-face meetings at the conventional providers. Jobs and profits move from the old providers to the new, which is why I say to my friends, look online for opportunities.
Nowhere is this more true than in the kind of professional work in which most of my personal acquaintances have made their careers — banking, insurance, law, accountancy, sales and marketing, journalism and so on. Yet despite this, most of the people to whom I give this advice completely ignore it, either because they don’t get it or they don’t want to believe it.
What they don’t understand (or refuse to accept) is that the Web Read the rest of this entry »
June 18th, 2009
Cheap jibe sullies SAP's SaaS strategy
My jaw dropped as I read this just-published CIO.com interview with SAP’s CTO Vishal Sikka. Last week, John Wookey, executive vice-president of large enterprise on-demand, set out SAP’s commitment to on-demand in a widely-reported speech in Amsterdam (SAP this week reiterated the commitment in a corporate press release). This week, the company’s CTO had this to say about leading SaaS vendor Salesforce.com:
“When [vendors] call their little salesforce-automation application a ‘platform’, that does actually bother me, as a technologist, to be honest with you.”
If SAP wants to be considered a leader in the on-demand space, as John Wookey proclaimed in Amsterdam, then the last thing its top executives should be doing is going around belittling the achievements of other SaaS players.
I find it astonishing that Sikka — who works out of the same Palo Alto facility as John Wookey — could be making such statements at this time. Was he not aware when he gave this interview of the likely content of Wookey’s presentation in Amsterdam last week? The message this sends is that Wookey’s initiative doesn’t have the wholehearted support of SAP’s board.
Unfortunately for SAP, the outcome of Sikka’s intervention may be the opposite of whatever was intended. His smug contention that the entirety of SAP’s supported software catalog is “timeless” is just an invitation for ridicule. Read the rest of this entry »
June 10th, 2009
Wookey: SAP's future is on-demand
Citing the spectre of long-forgotten titans of previous generations of business application software, SAP executive VP John Wookey set out the software giant’s commitment to embracing on-demand applications in a keynote presentation at the OnDemand Europe conference in Amsterdam today:
“On demand is the next stage in the evolution of application development … It is absolutely essential from SAP’s perspective that we embrace this change,” he said. “On-demand is what our customers are looking to invest in. If we do our job well and listen to our customers, these are the applications we have to be delivering. We have to drive to leadership in on-demand applications.”
As previewed by articles in the WSJ and FT today, Wookey (pictured) outlined the company’s strategy for bringing on-demand applications to SAP’s existing customer base of large enterprises. This is separate from the more widely publicised Business ByDesign offering being developed for midmarket companies and the BusinessObjects on-demand portfolio, although lessons have also been learned from those initiatives, he said. As EVP of large enterprise on-demand, Wookey heads up a team with a portfolio of on-demand products targeted at large enterprises, including CRM, strategic sourcing and expense management.
The core of the strategy, targeted for availability mid next year, is an architecture where new on-demand applications can be deployed instantly because they’ll inherit the existing policy settings from the installed Business Suite infrastructure. “The on-demand applications we deliver can behave as an extension of the Business Suite,” Wookey explained. “[Customers] just turn it on. They don’t have to redefine anything to the on-demand service.” The principle has already been tested with Read the rest of this entry »
April 29th, 2009
How far will Workday go with its $75 million?
For any business software start-up to raise a $75 million funding round would be good news in any economic environment. But in today’s challenging times — when people are even questioning the sustainability of the VC model itself — Workday’s latest funding round (Techmeme coverage) is especially remarkable. It’s certainly a boost to morale and credibility for anyone working in the SaaS sector, for which enterprise business systems vendor Workday is something of a poster child.
The new round, which has been dubbed a ‘Series E’, doubles Workday’s total funding to date to $150 million. It all leaves me wondering how exactly Workday will use the cash, and what the size of the investment tells us about the provider’s ambitions (of course founder Dave Duffield has always said the aim is to rival SAP and Oracle’s ERP hegemony, but market bluster is cheap — this is real money talking now).
The nature of the SaaS business, in which providers take on the upfront burden of building and operating the technology infrastructure, means that high-growth SaaS companies need big reserves of cash to fund their expansion. Josh James, CEO of Omniture, explained in a presentation to the SIIA OnDemand conference in San Jose last November how SaaS companies bleed cash with every new customer they acquire: “Every time we add an incremental customer, it costs us more money that quarter … When you multiply that by [n] customers in a quarter, that’s a lot of expense for no money.”
Workday’s management are well aware of this conundrum, as co-founder Aneel Bhusri explained in Read the rest of this entry »
April 2nd, 2009
SaaS channel models morph into shape
Mark down NetSuite’s announcement today of SuiteCloud Connect for Salesforce.com (all Techmeme coverage) as a victory for the cloud over individual vendors. Sure, this is still about who owns the biggest slice of the cloud (did you notice the resemblance between NetSuite’s SuiteCloud diagram and a pie-chart? Guess who got the lion’s share). But it represents a blow for Salesforce.com’s own-the-whole-ecosystem AppExchange model, just as much as it’s a step back from NetSuite’s former rhetoric about standardizing on a single vendor’s suite for all your needs. [Disclosure: NetSuite is a current client and I've also done work recently for Salesforce.com and Intacct].
It signals that intermediaries are going to have more power in the cloud and we’re not going to end up having to choose between just a handful of mega-vendors. Instead, interoperability (dictated by the cloud, not a self-appointed elite) is going to be the dominant meme and vendors will have to empower third parties to link their application platforms wherever customers can find the most value. The open cloud wins the day.
There’s a strong message emerging too about the importance of channels in delivering cloud and SaaS solutions to customers. While NetSuite is clearly motivated by being able to market its ERP and ecommerce platform to Salesforce.com’s SaaS-savvy customer base (and who in this market doesn’t covet a slice of that action?), it’s increasingly relying on a number of different kinds of channel partners to reach the market. At first glance, the partner ecosystem for SaaS doesn’t look that much different from the channel partners that traditional software vendors have worked with. But the detail of how they execute is much changed. Read the rest of this entry »
March 17th, 2009
Denmark first, then the world
As confirmation that Europe has its own indigenous SaaS stars, allow me to introduce e-conomic, a Danish online accounting vendor (UK site here) that’s been posting 60% annual growth rates for the past two years and is projecting up to 40% growth for the current year. With 2008 revenues of $5.6 million (32 million Danish kroner), the company is typical of a new generation of SaaS startups that are beginning to find their feet now across Europe (more Europe stories here), and will be one of many taking part in this June’s OnDemand Europe conference in Amsterdam, which I’m helping to organize (see disclosure).
Unlike in the US, private companies in most European countries are legally obliged to file public accounts each year. E-conomic has made a virtue of this by announcing its 2008 results in a press release (PDF) last week, along with its projected revenues for 2009 — an estimated DKK43-45 million, or just over $7.5 million. Its subscriber base stands just shy of 18,000.
I’ve written before about the difficulties European vendors face when expanding beyond their home country. The Nordic region is a microcosm of that challenge, with each country retaining its own currency, language and statutory framework. “It is by no means easy,” said Torben Frigaard Rasmussen (pictured), CEO of e-conomic International, when we spoke a week ago. “Denmark, Sweden and Norway are competely different countries.” But the flipside is that it’s far easier to get established in that home market and then use what’s been learnt there to expand elsewhere. E-conomic says it already holds 25 percent of the Danish market, and the profits being generated there are funding expansion elsewhere. It’s the equivalent of a US company getting established in, say, Read the rest of this entry »
February 18th, 2009
Weaving the real-time web into brick-and-mortar retail
When I walked into Circuit City in San Mateo last September to buy a Flip Mino pocket camcorder, the visit summed up the clash of the old and the new that retailers are facing in the digital age. The manufacturer’s website had referred the chain as a stockist, and my iPhone had helped me find my way to the nearest store. But I nearly walked out of there empty-handed because the assistant was having trouble finding the item on the shelves.
Circuit City has since gone out of business, along with a lengthening list of other familiar retail names. Another factor in many of these closures, according to one commentator writing about the demise of fitted kitchen and furniture chain MFI in the UK, is a focus on cost-cutting at the expense of staff skills and customer service. So long as consumers were flush with cash and almost limitless credit, retailers only had to open up shop and the takings would roll in. In today’s changed climate, I believe the retailers that have continued to invest in providing a good customer experience (provided they didn’t overextend their borrowings to do so) are the ones that will be best placed to survive.
Trouble is, the Web complicates the picture for retailers. For many purchases, consumers get a better customer experience from a well-automated website than they do from most retail stores. They can search easily, instantly see what’s in stock, look up product specifications and discover personalized suggestions and offers based on their browsing and buying history. Few retailers hook up their online presence to take advantage of the one clear benefit of a brick-and-mortar presence — the possibility for a consumer to drive a few blocks and pick up their purchase today — and the minority that do rarely manage to match the quality of the online customer experience with the service levels their staff are equipped to offer in store.
This is difficult enough for large retail chains — even those with deep pockets — but it’s a real challenge for the smaller retailers that often have the best record of personalized customer service in-store. How do they replicate that customer experience online without Read the rest of this entry »
February 11th, 2009
Sage shows why bigcos can't be trusted with SaaS
The first of my promised SaaS stories from Europe ends with an uplifting David-and-Goliath twist, but is first and foremost an object lesson in how not to introduce a SaaS offering, courtesy of one of the world’s leading small business software vendors, UK-based Sage. I know I ought to start with one of the many positive stories about SaaS in Europe, but I’m steamed up about this one, so here goes.
After a claimed 18 months in development, Sage at the turn of the year unveiled the beta of Sage Live, which combines a free-of-charge invoicing application and a simple £10-per-month accounting product for small business owners. Although to my mind I found it a bit too simple from an accounting point of view (no multi-currency support for example), it has some interesting Web 2.0 features such as integration with Google Docs and Google Calendar, keyword search across the application, support for RSS feeds in the dashboard and a Blackberry mobile client. Online accountancy watchers Ben Kepes and fellow-Enterprise Irregular Dennis Howlett both gave it positive reviews, while noting that this was a beta release and Sage was keen to listen to feedback and evolve the product.
But two weeks ago, Sage Live went dead after serious security flaws were exposed in the product, leading the company to shut down the beta trial. This is where the David-and-Goliath angle comes in. The flaws were exposed by the blogging founder of a tiny SaaS rival to Sage. Duane Jackson, CEO of UK-based KashFlow, which just last week celebrated passing the 2,500 customer mark, decided to have a detailed look at his rival’s offering and immediately blogged about what he discovered:
“Almost unbelievably, [Sage Live] show[s] your password on-screen when you log-in — in plain text. It’s sent to [Sage's] central ‘passport’ service using a GET rather than a POST — so your password is actually in the requested URL which is displayed in the status bar … Make sure no-one is looking at your screen when you log in …
“A little bit of prodding around the site and I found myself looking at … pages that only authorised people should be seeing.”
Russ McRee, a security analyst with Microsoft Online Services and (via his personal blog) a deadly scourge of flawed SaaS security practices, found additional problems and reported them to Sage, as did many others over the following days. A week after Jackson posted his findings, Sage took the service completely offline and it has not yet been restored.
I’m not privy to what went on within Sage during the development and unveiling of its new offering, but it seems clear that Read the rest of this entry »
January 27th, 2009
Intacct wins converts with help of its channel
One facet that’s becoming a distinctive, default feature for SaaS financials apps is real-time drill-down into consolidated global operational finance data — such as, who are my ten biggest debtors worldwide, or what’s the dollar value of my sales pipeline in Southern Europe this week? With yesterday’s announcement of Intacct’s latest release, I’ve now seen this from all three of the big-name pureplay SaaS financials vendors [disclosure: Intacct is a current client]. NetSuite brought this capability live last year with its One World edition, and it has always been one of the core attributes of Workday’s proposition. Like Workday, Intacct has coupled this with a new Flex-based user interface (see partial screenshot below).
Real-time global consolidation is distinctive for SaaS because, as Intacct’s SVP of marketing, Dan Druker, wrote on his blog for the announcement, “because we are SaaS, we can assume that all financial data for every business entity, in every location and in any accounting regime or currency is always available on-line and real-time … in a flat world connected by the Internet, the days and weeks it used to take to run a consolidation and reporting cycle collapses into seconds and minutes.”
With conventional software, this kind of capability is only available at huge additional expense, but it comes standard with SaaS. That’s a tremendous competitive advantage for SaaS vendors aiming to win over midmarket customers. As I wrote last spring of NetSuite’s OneWorld offering:
“Business decision-makers in today’s highly connected world feel a pressing need to have access to accurate, real-time data when they make decisions, and conventional midmarket business software doesn’t give them that, especially if they operate internationally or across multiple business units … [E]ach separate business operation has its own business systems and the data from each system has to laboriously aggregated at the end of each month before it can be evaluated. This time lag is going to be even more keenly felt now that everyone is nervous about the effects of the credit crunch. If your sales have suddenly reversed the rising trend of the past few years, you need to know that straight away, not six weeks after the fact.”
More than a thousand of Intacct’s 3,000 or so customers use its multi-entity and multi-currency capabilities (in fact, if it wanted to play a numbers game, it could claim “more than 10,000 businesses” in its customer base, taking into account separate entities within these customers). All of them will now be able to take advantage of the global consolidation function, which allows users to drill down from the global view to any individual record or transaction, and permits instant reporting and analysis of virtually any permutation of real-time data.
Thanks to this kind of capability — together with a longstanding strength in core financials and reporting — Intacct is now starting to win over its first Oracle Financials converts. The savings such customers can realize are pretty impressive Read the rest of this entry »
Phil Wainewright is a commentator and strategist on emerging software industry trends. See his full profile and disclosure of his industry affiliations.
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