SaaS for your business in the cloud

SaaS for your business in the cloud

Summary: Is it just lower upfront cost and faster time-to-live that's driving businesses to adopt SaaS? Or is it simply that the cloud is where business gets done today, and that's where business systems should operate too.

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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.

Topics: Cloud, Data Centers, Emerging Tech

Phil Wainewright

About Phil Wainewright

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant.

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4 comments
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  • Good Points

    Phil,

    Good article. I'm seeing the same dynamics "in the trenches" as the founder of a small but rapidly-growing SaaS firm.

    There is much less resistance from buyers to signing up for SaaS deals than there would have been two years ago. Part of this is because buyers are developing an implicit understanding that they are already operating "in the cloud."

    - Justin Hunter
    Founder and CEO
    http://www.hexawise.com
    "More coverage. Fewer tests."
    JustinHunter
  • RE: SaaS for your business in the cloud

    While I'm a big advocate of cloud computing, I've always hated the term because it deflects the discussion with the decision-maker away from the business value of the service to a focus on the way it is delivered. This opens the door for a series of questions from the decision-makers about security, realibility and other technical issues rather than more important business benefits.
    jkaplan@...
    • RE: SaaS for your business in the cloud

      I have recently moved back into the SaaS sales arena and have been getting myself back up to speed on latest developments / trends.

      But to jkaplan@... this is going to sound rude but it's just a suggestion...If this is where you regularly find your discussions with decision makers going, why don't you separate yourself out from the crowd and already have those objections planned for? You say "other technical issues rather than more important business benefits" but at this stage those business benefits are only important to you, not the decision maker, because you haven't yet established your (or your services) credibility with him/her.

      I came across a presentation online but you'll have to forgive me I can't think off the top of my head who it was. One of the points that the presenter made was that those issues you highlighted, they're the same yesterday, today and forever. Whether on premise or delivered by SaaS. But surely, THEY are the opportunity?

      Security - we are ISO 27001 (UK) accredited, is the customer?

      Reliability - 24/7 infrastructure, >100% redundancy on everything, replicated data centres etc... - does the customer have this?

      They are all covered off in the first few minutes of a presentation so that the discussion matures into business benefits rather than deviates off into the murky depths of which routers you're using in the west data centre...

      The next couple of years are going to be so much fun with SaaS propositions!
      _JG
    • Agree with jkaplan

      I agree with how cloud computing deflects the discussion. Does it / will
      it allow you to do things faster, cheaper, better, etc.? Where it resides is
      not enough...
      mtrush