ColinToal

Lawson's Harry Debes: SaaS Industry Will Collapse in Two Years

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.