I loved this post from CIO.com, reviewing an AMR Research report on the similarities between the big ERP vendors (SAP, Oracle, etc.) and Detroit's rusted Big Three: Chrysler, Ford, and GM. Money quote?
"Executives from one of the best-known ERP vendors recently talked to us about their 2009 product plans and strategy," writes Richardson. "At the end of the call, I expressed my astonishment that there were no plans to offer any part of their company's product line as software as a service."
As Richardson expected, the vendor's executives first response was to emphasize the advantages from an integrated suite versus a hybrid on-premises or on-demand strategy. "This quickly segued into a discussion of the challenges in making money with software as a service," he adds. "While I continue to agree with them on SaaS economics, they are missing the larger picture."
That larger picture, Richardson contends, is this: SaaS is for real.
I'm guessing that this same vendor would argue that there's no money in open source, either, and so pooh-pooh open source...to its eventual detriment. It's no longer a question if there's money in SaaS or open source to the extent of the go-go days of the 1990s.
Rather, the question is how to compete with vendors and communities that are sucking money out of the market through SaaS and open source. Eventually, SaaS and open source will create much larger markets as lower costs and lower risk will pave the way for increased adoption. But for the near term, incumbent vendors that refuse to compete on the economic terms set by subscription-based models are in for one heck of a ride...down.