Friday, September 21, 2007

ByDesign or ByDestiny?

The blogsphere is resounding with various bloggers analyzing the new SAP offering ByDesign. Some complain that the details are sketchy, some forecast doom while others have their own apprehensions. Irrespective of all this, the fact of the matter is:

- SaaS (however you may end up defining it) is a disruptive business model, especially for a vendor of enterprise technology who is used to a regular revenue stream from license sales

- Since it is so disruptive, vedors (SAP is an example) are very cautious in adopting it as it has a potential to cannibalize their existing business models. No wonder Mark Beinoff, an Oracle employee, was asked by Larry Ellison to startup Salesforce.com on his own, outside the framework of Oracle as it was a thing to be tried and tested outside the established setup. Remember that IBM did not push relational database model inspite of doing all the research and development on it as it had the potential to cannibalize their existing database system. Only after Oracle took up the relational model and started eating IBM's lunch did IBM launch a relational database product.

- SaaS still has a long way to go, as the model is getting adjusted to the needs and demands of various customers. That is why you have ASP, multi-tenecy, full hosting and many other SaaS variants. It is still to achieve "product/market fit" in the words of Mark Andreesen.

Stay Tuned.

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