Brian Sommer does an excellent job of explaining how the move to SaaS is working for the 'new kidz on the block' trying to displace incumbent ERP vendors. I'm interested in the accounting end of the market. It's the one area where SAP, Oracle, Sage, Infor, Lawson and Microsoft have felt comparatively safe. The argument goes that no CXO is going to move their transaction data into the internet cloud and therefore they can continue to milk their customers for maintenance dollars at usurious rates for at least the next five/ten years. There's a ring of truth in that.
The on-premise vendors have done a terrific job creating the kind of FUD that will keep many a CFO wary about perceived security issues. But then those same vendors forget that many if not all companies make at least some passing use of the internet and that individuals increasingly use services like online banking, share their data via PayPal and what not.
Where the SaaS vendor miss a trick is in asking buyers what is so sacred about back office accounting data. Surely sales opportunity data a la Salesforce.com is far more valuable yet now we see Salesforce.com hit the $1.3 billion revenue run rate, servicing 67,900 customers.
Yesterday I sat in on a FinancialForce.com early adopter panel. Let's be clear - none of these companies have been through a full accounting cycle so we cannot be sure they're going to be as happy in say a year's time as they claim today. Nevertheless, what was unusual is that all the panelists on show are making accounting sound interesting. When was the last time you heard that?
Even more unusual is that fact that at least in one case (Quattro - see above video) the company on display makes SaaS sound as natural as taking an early morning shower. It's just something you do. In this case, we're talking about a startup where you'd expect the company to take an alternative view of the world but what about established businesses that are in the risk business? Here I was impressed by The Compliance Team Inc which talked about hard benefits - like 9% reduction in billing cycle times. Or Live Out Loud which talked about the ability to naturally reduce headcount from eliminating data matching and rekeying. These are not soft but measurable bottom line benefits you simply cannot get from an on-premise solution.
The most striking thing came in the Q&A. What about GAAP reporting? Not an issue. How about multi-currency? Got it. Projects? Yep...and on and on. One company has gone so far as to build their own payroll system using the Force.com. To use geek speak - that's sick. Whoever did that in the past?
So what of the future? Economic vigor comes from the startups, visionaries and innovators. Where do you think they're going to go a-looking for their accounting?