May 27, 2008
SaaS and it’s disruptive impact on the status quo for enterprise software
Posted by Paul Giurata
I was invited to participate in a roundtable at the Red Herring North America conference a few weeks ago. The topic was "Enterprise software - The Online Revolution." The focus was on how SaaS challenges the existing status quo in enterprise software.
I wrote down some brief summary points I wanted to share. The ideas mirror some of the points in the life cycle framework I have discussed previously for SaaS.
| Issue | On-premise software | Software-as-a-Service (SaaS) |
|---|---|---|
| Infrastructure | Custom, on-site | On-demand platforms including Salesforce.com, OpSource, Amazon, Intuit |
| Development time frame | 12-18 months | 90-180 days |
| Rate of innovation | Slow | Immediate based on customer feedback |
| Upgrades | Costly to roll out by platform and customizations | Automatic rollout to all customers at once |
| Revenue focus | License revenue | Life-time value of customer |
| Engineering focus | Product-centered | Meeting new customer needs |
| Customization | Significant and costly | Configurable only and no cost |
| Market focus | Enterprise | Small and Medium size businesses, departments within organizations, and enterprises |
| Technical staffing | Development, Q&A, implementation, professional services, training | Tighter smaller focus |
| Marketing costs | High | High |
| Capital investment | Substantial (don't forget yearly licenses in cost) | Minimal |
| Head count | Critical to scale with each sale | Critical not to scale with each sale |