ERP analyst Derek Singleton posted a paean to the SaaS variant of cloud computing. With his head firmly in the clouds looking for rainbows covering five points, Derek does trip over one salient feature of modern computing—the user experience should be the focus of vendor efforts (everyone has feature / function these days). For Derek, here is some ground level perspective on his key points.
First, he notes that cloud companies “have momentum and attract great talent.”
SaaS companies have an intangible that’s working to their benefit – they’re recruiting exceptionally bright, young talent.
The same could be said of the “Dot-Coms” of a decade ago, images of a bubble economy are hard to avoid here.
His second point is the wonder of multi-tenant architecture and ”smoother scalability.” To the usual claim of overnight upgrades across an entire customer base, Derek adds a new one:
A further advantage of multi-tenancy is that company-specific customizations are left in tact when the system is updated. This is because customizations are made in metadata. For the non-techies out there, metadata is data that defines the settings and customizations for each customer, but is maintained separately from the core application code.
Multi-tenant architecture is a mixed bag for ERP installations – one swoop upgrades can cause problems for any firm covered by Sarbanes-Oxley (whether directly or through bank loan terms). The meta-data approach is indeed an appropriate development technique, but preceded multi-tenant architecture and SaaS by at least a decade. Traditional ERP vendors have employed meta-data approaches for quite a while. For example HarrisData restructured its applications to a meta-data base starting in 2000, while HarrisData’s RTI Software division began using meta-data in 1992.
The third point that the “cloud is changing enterprise software consumption” is a recycling of a three (four?) decade old argument over how to license software for enterprise use. Many pricing models exist, from the enterprise wide license, to the cpu license, to various user based license schemes (including SaaS licensing). For each pricing model there is an equivalent array of payment options from upfront cash to lease terms. The arguments and distinctions between the pricing / payment options amount to deciding whose ox is being gored at any point in time.
The fourth point on the importance of user experience is a very strong point, “great user experience equals happy customers.”
Historically, enterprise software hasn’t been overwhelmingly friendly when it comes to the user interface (UI) or user experience (UX). It’s why a standing army of consultants and professional services firms exist to help buyers customize their systems and learn how to use the software.
Too few traditional vendors take this point seriously, focusing instead on capturing the monopoly rents derived from providing the standing army of consultants and professional service people. However as with meta-data above, a focus on user experience is independent of cloud and SaaS deployment of applications. HarrisData emphasized the user experience beginning in the mid 90s, and has held training and services costs to less than 5% of revenues annually since 1996. Reducing training and services required to deploy our applications is still number one on HarrisData’s to do list.
The final point is that since cloud and SaaS is on the web, and young people “get the web,” the cloud is youthful and innovative and magically better than sliced bread. Apparently young people want
web demos, trial versions of the system and user ratings of the product.
This is hard to argue with, as young (and old) people have wanted these thing in the 80s and 90s as well. Perhaps all people would be better off focusing on the business value of various ERP options rather than the hype and fluff of analysts.