SaaScon: I Know You Are, But What Am I?
W
atching a panel discussion this morning break into friendly argument between an SAP representative and the CEO of RightNow Technologies, I realized that it typified my experience at SaaScon (the Software as a Service conference).I've heard conflicting opinions about, well, just about everything. Some of things I've heard:
I've heard 3 different companies claim to be the "largest Software as a Service company in the world."
I've heard that software is dead. I've heard that enterprise software is dead. I've heard that, with its current 20% CAGR, SaaS will become a $25B market by the end of the decade...roughly 10% of the enterprise software market.
I've heard that the biggest hurdle for SaaS is security. I've heard that the biggest hurdle for SaaS is compliance. I've heard that the biggest reasons to use SaaS are security and compliance.
I've heard it's cheaper in the long run to buy software (on premise). I've heard it's cheaper in the long run to buy software as a service. RightNow Technologies charges the same, hosted or on premise.
I've heard that it's easier to get companies to buy SaaS faster. I've heard that the problem with SaaS as a revenue stream is that it takes a long time to get customers. I've heard that SaaS customers are "stickier:" more likely to stay with the vendor. I've heard that SaaS customers can leave at any moment. I've heard that customers with on premise software are more likely to stay with the vendor.
I've heard that SaaS is the on-ramp to on-premise software. I've heard that SaaS is the off-ramp from on-premise software.
What does all of this point to? Clearly, this is an immature and not-well-understood market. Many companies have many different ideas.
The biggest point that jumps out at me was the CAGR--with huge growth over the next 4 years, SaaS will become 10% of the enterprise software market (leaving 90% on-premise).
This hasn't soured me on SaaS at all. Companies are learning their way around the technologies as they figure out new business models. Disagreement is natural. A lot of what's happening here is so new that the standard answers haven't been agreed upon yet.
A sure sign that SaaS is still defining itself? I've heard several people refer to "SaaS 2.0"--a not-so-subtle attempt to grab on to the coattails of Web 2.0. When your marketeers are grabbing at meaningless labels that have been attached to other technologies, you know that you haven't found your own identity yet.
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