You can hardly turn a webpage without seeing something written about saas/on-demand/cloud computing, or SOC as I prefer to call it. Anyone would think that on-premise applications are dead. And if you read Ray Wang’s recent analysis of vendor revenue trends you’d be hard put to think there is anything other than an inexorable shift to SOC. But what exactly are customers buying?
Ray’s analysis shows up the dominance of Salesforce.com in CRM, or should I say sales force automation plus service space with revenues exceeding $1 billion a year. The talent management players like Taleo and SuccessFactors are also doing well. Witness SuccessFactors monster deal at Siemens for some 420,000 seats. Then there’s large Workday deployments at Flextronics and Chiquita. Strategic or tactical?
That depends on your point of view. Sales people are notorious for hating anything that’s foisted upon them. Salesforce.com has been able to leverage that knowledge with relatively easy to use and modestly priced applications that are in sharp contrast to the Siebel’s of this world. Getting decent pipeline information might well be strategic. The current need to manage human resources such that you have an optimized workforce is critical in current economic conditions. Strategic or tactical?
The on premise vendors sniff at the SOC vendors arguing that none of their enterprise customers would put their financial data in the Internet cloud. Be that as it may, ADP has been successfully offering outsourced payroll for many years. To my mind there is little more mission critical than getting people paid and yet companies around the world have no difficulty handing off that process to a specialist provider. Is accounting so much different?
I argue that a 600 year old method of recording transactions – which forms the core of ERP – can easily be schlepped into SOC with all the potential cost benefits that would accrue. At the SMB end of the market check this announcement from CODA2go now FinancialForce and the Corefino deal. In the UK I see a slew of SOC accounting vendors. They’re bringing value to customers the on-premise vendors can only dream about and at a fraction of the cost of on-premise alternatives. Strategic or tactical? If those customers are to be believed, the answer is that an on-premise commodity is being transformed into an online strategic tool. Therein perhaps lies an answer and lesson for both buyers and sellers to contemplate.
What do you think? Does the prospect of putting accounting data into the cloud excite or terrify you? Is it a viable alternative or just too risky?
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