SaaS the best model of Acquiring software @ this time of Economic Crisis??

Today I attended a roundtable at the SAP New York office, the discussion was primarily focused on IT investments in the current economic situation. The roundtable included Leo Apotheker Co-CEO of SAP, Naomi Wyatt, secretary of administration for the Commonwealth of Pennsylvania; Partha Biswas, CIO of Joerns Healthcare; and Andrew McAfee, Harvard Business School professor. Bruce Richardson, an analyst at AMR Research, moderated the panel.

There were a lot of interesting discussions among the group on which I will do a few posts. For today's post will focus on the topic of On demand / SaaS or cloud related topic. Couple of observations here:

1. There seems to be a sense of "reduced seriousness" on the whole theme of cloud / SaaS et, its being looked at as a very "Silicon Valley" concept, Almost like it doesn't apply to the other "SERIOUS" / "Important" part of the business world.
2. The discussion further moved to that SaaS model was only suited for lightweight applications. (Wonder if that means BBD (Business By Design) is a lightweight application). With jokes that if certain processes, data etc are brought on to the cloud, it would collapse (Beware the sky is falling).
3. On BBD when asked if SAP was experiencing engineering challenges (cultural in nature) with BBD, Leo came back saying that the only reason they are going slowly with BBD is that they are concerned with the financial viability (profitability/cost/expense models) and nothing else.
4. I followed up this discussion up with a question that isn't it good for them to provide more / all of the customers/prospects with the BBD / SaaS choice particularly given the economic situation and frozen budgets/ capital expenditures. I got a long circuitous answer which said the CIO's currently only want to evaluate if they should be investing in software or not and the model is less important. Here I respectfully disagree. I believe there is no better time for the SaaS model, both from a vendor & customer perspective. 
5. It doesn't stop here, then they go back to the old there that SaaS App's done allow for Strategic Differentiation. I am confused earlier during the conversation they indicated that though SAP software deliver software factories but the customers are able to leverage its capabilities in unique ways differentiating themselves. My understanding is that the BBD version of the software is based on the next version of their all powerful netweaver platform, cant wonder why organizations wouldn't be able to achieve the same level of differentiation.
6. On John Wookey's role , Leo was rather quite and indicated that some time needs to be given for him to settle down and he will talk about his role himself.
7. On a positive note, when Noami Wyatt indicated that on the BI side they would be interested in exploring options like on demand / SaaS based BI particularly to provide information to users external to the organization or resources who don?t want to be using SAP - Leo was quick point out that BOBJ has a solution for the same crystalreports.com (More on this in future posts)

I understand the SAP doesn't want to hurt/ kill its golden goose (Large Enterprise Business) and mess with their financial's in a negative manner (particularly given the economic conditions) , but I think it doesn't make sense for them to take this almost negative approach in a space where they havea product that is ramping up - BBD, assuming that it is going to be a key part of the future. SAP might not have cultural challenges on the engineering side, but i think they are having a cultural challenges on the "go to market" & economical side of the house.

What do you think??

Prashanth Rai

Tags: sap - bbd32 - business+by+design - saas - ondemand - nyc - leo+apotheker - crystalreports.com

Comments

[Narinder]

SAP is both inconsistent in their positions (reflecting a deeper inner conflict) and too often wrong just in denial. The still believe SaaS is 'just a delivery model' ?

Check out the writeup from an event at their Palo Alto office.
www.appirio.com/blog/2008/10/good-news-for-cloud-computing-nicholas.php

I guess that's just more of that Silicon Valley nonsense?

Microsoft announces the future is coming and it is the cloud, Oracle embraces it while Larry ridicules others - though he personally owns significant stakes in two of the SaaS leaders - and SAP, we'll they're still trying to figure out if they are in or not.

Lets recap SAP's positions
- Business By Design will quickly dominate the industry !
- Uh wait, its harder than we thought, it will be at least 6-12 months delayed :(
- We just got Wookey to run our large enterprise on-demand strategy !
- Actually we are still trying to figure out his role :(
- We are slowing BBD because of the economic implications (e.g. we can't fleece customers which we did earlier this year by raising maintenance)
- Oh, you're interested in on-demand, never mind what we said, check out crystalreports.com

Crystal Clear.

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this economic crisis must must be solve right now!