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  • commenter
    User 237430
    Sep 02 07:25 PM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    Oracle's stock growth for the year is now down to 4.0% for the year. A loss of 8.5% growth (the growth was 12.5%)since the announcement of Oracle's CEO pay of 83.6 million. Avon's one year growth is over 30%. Avon's woman CEO makes 5.1 million. Is Oracle's CEO overpaid?


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  • commenter
    Count_Meout
    Aug 31 12:23 AM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    Traditionally, there 3 important source of revenue in solution software are - User license, consulting and software support. Infrastructure maintenance has never been part of a Software Solution provider. But, with SaaS, the provider has to bundle this, and this is recovered on recurring basis overtime. In software business,infrastructur... has to be constantly upgraded and maintained. Hence, what is recovered over time is also lost over time. Also, as User entities grow, so also the complexity.
    Perhaps, the complexity of it all is 'looming' large. It is one thing to talk about 'Utility model' in software, but the reality seems to tell a different story.
     Reply
  • commenter
    desi
    Aug 30 06:23 PM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    Hello,

    I think the Lawson's CEO, Mr Debes is absolutely right. I think all the major ERP/SCM/CRM vendors are saying the same thing the only difference is that Mr. Debes is a straight shooter. Based on a recent article in Financial Times (www.ft.com/cms/s/0/33c...), the SAAS business can be summed into three things >>> attracting new customers, generating subscription revenue and customer replacement. The first and last activity of this business is always a over-head on the companies balance sheet, selling a hyped product to a customer. The subcription business is driven by how much value is generated for the customer and is always a questionable issue.

    With the global economy heading south and companies managing their cost to the n'th detail, I think we have a hurricane "Gustav" on the door-steps for the SAAS companies. And dont behold, even the company that pioneered the SAAS mantra (Salesforce.com) is forecasting dark clouds in Q3 and Q4' 08.     Reply
  • commenter
    ColinToal
    Aug 29 03:36 PM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    Flash,

    In the interest of full disclosure - I work at ORCL in one of their SaaS operations. I do not speak for ORCL in any capacity. I hold shares in ORCL, I do not hold CRM.

    I have no access to material information about ORCL and everything in these comments are my own opinion and do not reflect the opinion of my employer.

    I would say that MSFT is not an apt analogy.

    CRM's profit is pretty much non-existent, so I know that the profit margin at MSFT is higher. I would also guess that the rev/headcount number at MSFT is higher than at CRM. CRM - after option expense - does not return $0.08 a share.

    While MSFT hasn't seen its stock rise, its market cap is many times CRM's and MSFT has paid a significant dividend recently. As for the 300x multiple - people are paying are betting on 'long tail' profitability and the CRM 'growth story'.

    As for broad 'model' comparisons between SaaS and on-prem - I don't know who has better margins. I think that, investors looking at SaaS services should measure those investments on the same set of metrics they measure a telco on (ARPU, churn, etc).

    I agree with Nom De Plum's point. Its not 'impossible' to make money in subscription based services. You either need premium pricing (like Thomson) or you need lots of scale (millions of paying customers).

    Again - this is just my personal opinion.


    Colin     Reply
  • commenter
    People'R'Sma
    rt
    Aug 29 11:28 AM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    I should dump Lawson from my portfolio. Reply
  • commenter
    Nom De Plum
    Aug 29 09:55 AM
    My Website
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    GAAP profits, P/Es, PEG ratios...do you think private equity and other intelligent investors put an ounce of faith in these metrics. Those are nice tools for PMs managing 100+ stocks to make quick decisions. The true value of a business it the excess cash it generates above and beyond its need for cash. SaaS will ultimately converge to become a scale required industry. I'm invested in smaller providers that will get acquired (CALD, DMAN, SLRY) because I think that's the better road in the short-run, in the long-run when it becomes clearer (GOOG, MSFT, CRM, someone we'e never heard of) who will survive and flourish it will be a great growth and excess generator for years to come become of its scale advantage. Reply
  • commenter
    Flash Gordon
    Aug 28 06:23 PM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    Colin,

    change my prior comment to "if you say on-premise"
    ... Flash     Reply
  • commenter
    Flash Gordon
    Aug 28 06:20 PM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    Colin,

    I guess it's obvious but I'm not seeing it. Which has better margins, Saas or on-premise. I'm short crm. If you say Saas I'm going to laugh. 100,000 people at msft kill themselves to do hard things and the stock has gone no where for the last 8 years. and I think msft has monopoly power in the marketplace. crm has a p to e of 300 and seems to keep going up even though they make 8 cents a share. Something doesn't make sense.     Reply
  • commenter
    ColinToal
    Aug 28 06:14 PM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    Flash,

    They make improvements and changes all the time. They coordinate carefully with their customer to manage the process in as efficient and non-disruptive a way as possible.

    They also take great pains to design and implement enhancements or features in order to cause the least disruption to the customer. Most packaged software providers go to these same lengths. No one wants to distract the customer needlessly - regardless of whether they provide a leveraged service, or a licensed package.

    Change control isn't any harder in SaaS - it just means the SaaS provider bears part of the cost of change. It comes out of their operating margin - not the customer's. This is why SaaS is a hard business - which is what I meant when I said that Ellison says the same thing. SaaS is hard. Software is not cocaine, and people are not dumb - but SaaS is hard.

    Customers can't 'veto' a change in a leveraged service (be it software or the gas company), but if you read your EULA for your on-premise software, you can't really veto a change there either. If the provider says you have to take the upgrade, then you have to take the upgrade or void your access to support, or possibly even your license.

    The important thing to take from this article is not Debes' crazy hyperbole about cocaine. Its important to know, as an investor or purchaser of SaaS, that the operating margin for the provider is VERY different than the operating margin for licensed on-premise software.
    Reply
  • commenter
    Flash Gordon
    Aug 28 05:23 PM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    Daya - great article. Thanks for posting it.

    It's funny Debes has the perspective, there was tymnet, there was Ask ManMan .... , . People think the cloud idea is something new.

    I'm not sure I agree with Debes with how easy it is to stop using Saas. If you just put in 8000 customers I don't think you'd lightly make the decision to use something else.

    My big question with Saas is how you do change control. I am an IT person. So Saleforce is sitting there with 5000 different customers, each with their own installation, presumably starting on the same release. And some of those customers are very fussy about anything changing in their application. So how do you make any improvement to the base system given all the technical issues and the fact that some customers might try to veto a change you want to make.     Reply
  • commenter
    jgrabski
    Aug 28 03:52 PM
    My Website
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    Most rational people detest the idea of being “hooked” on anything. And when in such a situation, humans actively seek to unload that which holds and confines them. It is true of cocaine and it is equally true of traditional license based software. SaaS will be successful because the underlying economic benefits to the end user favors SaaS over the traditional license based model. Whether SaaS companies can generate superior returns over conventional models is perhaps questionable. However the absolute economic value that SaaS delivers to the end user is quantifiable and indisputable. In the end, this will drive the continued adoption and success of the SaaS model and it is for this reason that the conventional model’s days are numbered.

    I hope there are more CEOs out there with the same view. Taking their customers is like shooting fish in a barrel.
    John Grabski
    CEO
    ClearMomentum

    Reply
  • commenter
    Michael SaaS
    Aug 28 03:02 PM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    Harry Debes is completely wrong. He has a vested interest in playing down SaaS because it will collapse his business. Just watch Lawson's stock. Harry's only solution is to get acquired. Reply
  • commenter
    Did he
    really say
    that
    Aug 28 02:16 PM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    Did the CEO of a software company just say that "people are stupid" and equate his software with "cocaine". Hmmm. Interesting that Lawson isn't doing better with this genius running the show. Reply
  • commenter
    ColinToal
    Aug 28 11:38 AM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    Ellison says the same thing. SaaS is a hard business - but its not impossible like Debes says.

    Look at Thomson or Bloomberg. These guys are SaaS too - and enormously successful.

    Reply
  • commenter
    sapfanboi
    Aug 28 10:51 AM
    Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years [view article]
    I've never seen or read any interviews with this guy before. I think I have a new man-crush. Love the blunt straight talk for a change. Reply
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