Setting the Record Straight on SaaS

 |  Includes: CRM, GOOG, IBM, MSFT, ORCL, SAP
by: Jeffrey M. Kaplan

There have been a series of Software-as-a-Service (SaaS)/cloud computing research reports and industry rumors which have emerged over the past few days and weeks which I haven’t had a chance to comment on because of my hectic travel and work schedule.

I’d ordinarily try to dedicate a standalone blog post to each of them, but don’t have the time and don’t want to give them more attention than they deserve. But, I have had a number of clients and friends ask me for my opinion on these developments, so here’s a quick round-up of my thoughts.

  1. Will Oracle Buy This rumor popped up again this week in a Wedge Partners research report summarized on Barron’s Tech Daily website. I suggested this scenario two years ago, and still think there is a chance that Larry Ellison will make a hostile bid for Ellison knows that this maneuver is less likely to succeed today because the companies are such fierce competitors. However, he will be happy if his acquisition bid does succeed in derailing’s (NYSE:CRM) momentum. I’ve suggested to many of my colleagues and clients over the past year, and want to publicly state here, that if Oracle (NASDAQ:ORCL) makes a hostile bid for, I predict Google (NASDAQ:GOOG) will come to the company’s rescue and acquire The two companies have established a strong working relationship and share the same corporate mission of converting the world to the ‘cloud’. Yet, Google continues to struggle in its efforts to win enterprises. Google would gain greater credibility and access to large-scale organizations via a acquisition.
  2. Offshore Companies Aiming At On-Demand Services? A recent Saugatuck Technologies research note proclaimed that India-based software development and business process outsourcing (BPO) companies are eying the SaaS marketplace and broader cloud computing opportunities. Although it is nice to have Saugatuck document this trend, I’ve been commenting on the intersection of the offshoring and on-demand services industries since 2006. I’ve also been getting a steady stream of inquiries from India-based firms of all sizes for more than two years hunting for acquisition opportunities in the SaaS market as these companies seek more cost-effective service delivery mechanisms to offset the labor-arbitrage which they are facing in their traditional people-intensive software development and BPO businesses. As I stated in my 2009 predictions, today’s economy will continue to make these acquisitions more economical.
  3. Is Business Intelligence a Viable SaaS Business? Forrester Research issued a new report suggesting, “The SaaS BI space is largely unproven.” This came as news to a myriad of SaaS-oriented BI vendors listed on the SaaS Showplace. I’ve known and done business with many of these companies for the past three years. As I stated in 2007, and in numerous whitepapers and webcasts, SaaS-based BI solutions are perfectly designed to respond to the escalating pressures on companies of all sizes to better leverage corporate and customer data to improve their performance. Not only are they more economical and easier to deploy, but they are better architected to permit multi-user access across increasingly dispersed organizations. That is why the rising demand SaaS BI vendors are experiencing disputes Forrester’s findings.