Every SaaS conference this year – Dreamforce, SuiteWorld, PowerPlex, Rising – has been brimming with confidence and mostly happy customers. Things are going swimmingly well. No surprise – for a decade now, my blogs and books have been celebrating SaaS executives and customers.
And yet, when I recently wrote Chapter 4 of SAP Nation 2.0, which looked at 25 years of next-gen enterprise software – JD Edwards’ OneWorld, Microsoft Project Green, Oracle Fusion, Infor SuiteWorld and SAP NetWeaver and BusinessByDesign – I was reminded there are hundreds of thousands of those customers which have not “rip and replaced” their old software.
They have “ring fenced” their legacy apps with Salesforce CRM and Workday HRM , they have “two-tiered” NetSuite in smaller subsidiaries, they have Plexed their shop floors in spun off subsidiaries, but they persist with older products in the majority of their processes. Others have stayed with older products while moving to third party maintenance, changing infrastructure and application management providers, but stayed away from SaaS. This, in spite of fact that some of the incumbent vendors have gone out of their way to annoy customers with ill advised maintenance increases, compliance audits and other shenanigans. This when their ecosystems have stubbornly refused to deliver cloud and other efficiencies to these customers.
So is the glass half full or half empty? Do these customers continue to represent the next big opportunity or are they laggards who will take too much effort to convert? You hear both points of view, and then you also hear the third one: the SaaS value proposition needs to become more compelling. The functional footprint, especially in industry specific processes, needs to improve dramatically. SaaS vendors need to automate the migration not continue to depend on the previous generation labor intensive delivery model.
So how will the landscape look in a few years?. The incumbent vendors have been acquiring/maturing their own SaaS functionality. Customers are back to developing custom functionality as they make their products and services smarter (and sometimes licensing functionality from industry peers). As industries morph rapidly, they are exploring newer industry focused vendors.
There could be players from left-field. GE could become a vertical industry application provider. Amazon could diversify from infrastructure into applications. Apple could expand from mobile application ecosystems to broader enterprise ones.
I could go on speculating. The fact is we are moving into uncharted waters for SaaS world. It should be an exciting next few years.