The sky is falling! Lawson CEO offers evidence showing cloud computing, software-as-a-service will soon collapse.
Harry Debes, CEO of Lawson Software, is predicting the failure of software-as-a-service (SaaS). In an interview with ZDNet Asia, he claims the SaaS market will collapse in two years. Debes says history is repeating itself -- offering as evidence the past failures of ASPs, among other initiatives. As a refresher, WebGuild Silicon Valley provided this summary of SaaS offerings:
Here's an excerpt from the ZDNet Asia interview: "Q: All the other big players are going 'on demand'. Is cloud computing the next big thing?
Debes: This 'on demand', SaaS phenomenon is something I've lived through three times in my career now. The first time, it was called 'service bureaus'. The second time, it was 'application service providers', and now it's called SaaS. But it's pretty much the same thing. And my prediction is that it'll go the same way as the other two have gone--nowhere. SaaS is not God's gift to the software industry or customer community. The hype is based on one company in the software industry having modest success. Salesforce.com just has average to below-average profitability. People will realize the hype about SaaS companies has been overblown within the next two years.
"An industry has to have more than just one poster child to overhaul the system. One day Salesforce.com will not deliver its growth projections, and its stock price will tumble in a big hurry. Then, the rest of the [SaaS] industry will collapse."
So, do the failures of ASPs and the performance of SalesForce.com provide enough evidence to justify Debes' claims? If he is wrong, what variables are different now than before? Many still believe the SalesForce.com model is the way of the future -- including me. Here's my evidence: Times are different. Vendors are much smarter about offering services that improve quality and reduce customer effort. Technology has advanced, and delivery costs are lower. And most importantly, customer expectations have changed. Only time will tell, I suppose -- but I expect the cloud to win over software that's licensed and delivered traditionally.