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SaaS Week

Krissi Danielson

Are SaaS Naysayers Forgetting About Customers?

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So I'll admit right away that my understanding of the SaaS market is that of a journalist and not of an IT analyst, so I could be missing something here, but this morning I've been reading a lot of discussion of SaaS naysayers after Harry Debes of Lawson wrote a commentary about why the SaaS market would "collapse" within two years.

There have been others who seem to agree with Debes, saying that there is far more money to be made in traditional software than in SaaS and that these technologies didn't offer a viable alternative to traditional on-premise software, noting the lack of any impressive profitability by any SaaS vendor. Others have pointed to recent service failures by major vendors as obvious evidence that cloud computing isn't ready for enterprise use.

Sometimes it feels like many commentators are doubting SaaS because of the burden for the vendor. The idea that SaaS would fail because there were less profits in it sounds silly to me. But I'd think that as long as customers want SaaS, someone is going to be around to provide it for them.

Noted SaaS analyst Jeff Kaplan points this out in a recent article on SeekingAlpha. He writes that, "Debes refuses to see how the SaaS movement is being fuelled by genuine customer demand and is experiencing accelerated growth because of widespread customer satisfaction with the business benefits of SaaS."

The old business adage is that "customer is king." Unless something happened to cause customers to not want SaaS, such as a widespread epidemic of outages or the downfall of the Internet (yes that's a joke), I just cannot see the case that SaaS is going away anytime soon.

Joshua Greenbaum, another ZDNet blogger, probably has the most sensible view on it. He notes that Debes has some points about the SaaS market and he acknowledges the customer appeal factor, but he suggests that pure-play SaaS is not viable in the long run but that as the offerings evolve into more of a "value added SaaS" that SaaS itself is really "only just getting started."

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Thanks, Krissi, for one of the better articles in this thread. Don't discount your perspective "as a journalist" - your focus on customers is the right one, IMHO.

I carried the conversation another step (linked to my name) in a follow-up to your article and others.

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