Bill McDermott, SAP’s CEO and president of global field operations, has a prediction on when software-as-a-service will become a popular platform on which large business will run their core business operations.
"Never," McDermott said, in an InformationWeek interview on Tuesday.
Companies require a software foundation on which to build business processes, McDermott explained, and by its very nature, SaaS doesn’t offer the bandwidth or the capability to deal with complex operations, he added.
There’s a certain degree of cognitive dissonance in this stance: on one hand, core, platform functionality hasn’t been fully established in the SaaS space (although Workday is making solid – and rapid – strides towards getting there), and the most successful SaaS offerings are still fairly specialized. On the other hand, I can’t help but feel that SAP is threatened by that which they truly can’t offer right now (at least until Business ByDesign sees reinvestment and a relaunch), so a protectionist statement extolling on-premise ERP software makes sense. For now. From the world’s largest business software vendor.
Netted out, I see this statement as one to buy some time, because McDermott is technically right – for the time being, truly core, platform-grade functionality isn’t offered by the SaaS market. By the time he can officially change his stance, it will likely be well on its way.
And let’s be clear: I am in no way evangelizing SaaS as the savior of enterprise technology, because when it comes right down to it, SaaS is just another technology, just as the paradigms of the mainframe, client/server and server-centric thin-clients are. Each approach offers their benefits and costs, and in the end its a matter of personal (organizational) choice, preference and fit.
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It is kind of interesting to me inside of six months how the CEO’s of SAP and Lawson feel the need to publicly denigrate SaaS as a platform. It seems like a little ‘FUD’ campaign to me, but why go after SaaS if it really is that insignificant a factor still in most enterprise deployments? Maybe is really is becoming a threat after all.
Steve: it’s a timing thing, and most ERP vendors know it. Not that ERP will ever go away, but the threat of SaaS becomes more legitimate as a market-shaping force as time progresses. SaaS applications are only going to get more capable and sophisticated, not less. And there’s no glass ceiling that will limit their functionality — at least not outside of marketing efforts.