A Note: this post was written by a guest writer, and does not necessarily represent my opinion. That said, I think it’s important to host a variety of thoughts and perspectives on the blog and thus, I give you the following article written by Lars Dalgaard, the CEO of SuccessFactors. As always, please feel free to comment.
As an outsider that moved into the software industry five years ago, I’ve been amazed to watch the wild mood swings that take place due to over-hyped and over-marketed technology trends – which every vendor seems to chase loudly in pursuit of “the next big thing.”
Of course, customers in the real world are more focused on “what’s now” rather than “what’s next.” And yet they have to wade through reams of white papers, data sheets and web site content to figure out whose software actually does what – and then hope the promised features actually migrated from the press release commentary into the real product code.
The same type of real-world sanity check can tell you whether a technology trend is here to stay or hyped to decay. A good litmus test is whether it’s vendor-driven or customer-driven.
It’s exactly this test that I believe can sort through the hot topic du jour: software-as-a-service. Admittedly the topic has been heavily hyped by Silicon Valley types looking to drive big multiples. And now that some of those high-profile players have experienced some hiccups, the naysayers are working overtime to call the whole idea into question. Scare tactics and “what if” scenarios abound to push people back into their comfort zones.
Sanity check: Having entered into this business in part due to my frustrations deploying enterprise software for major companies in Europe, I can tell you definitively that the SaaS trend is customer-driven and is here to stay.
It frankly never made any sense to buy bloated software cooked up in an ivory tower; pay 5-10 times more for consultants to tell you how to use it; deploy it for just 5-10% of the people who really need it; suffer through massive upgrade cycles every 2-3 years; and then not even be able to get the data you need to run your business. Now that customers have a choice, there’s no going back – and that’s a good thing.
To help sort through the hype from reality, I’d like to address five lingering myths that just don’t hold true based on our experience with 350 customers worldwide, across all industry sectors and company sizes, that collectively have more than 1.3 million active on-demand users:
*Web-based solutions are unreliable. All companies experience unanticipated interruptions. Whether you are a phone company, a power company, an Internet provider, or yes, even an on-demand software application, unforeseen circumstances might arise. But it is what you do as a company for your customers during these rare occasions ensures that they will remain your customers. For us, a renewal of 97% speaks volumes about our customers’ faith in SaaS and the unprecedented value it can provide.
*Confidential information is at risk. Security and data integrity have never been more of a priority. Compromised data – offline or online – can be the death knell of a company. Because SaaS vendors can leverage investments across multiple customers, and have experts in security, encryption and auditing test their systems every day, many of our customers find that we can protect their information better than they can. Multiple layers of protection ensure that customer data is as secure online as it is offline. The latest encryption and security capabilities are quickly integrated. Auditing and compliance are a given, not forgotten.
*Services will be locked and difficult to change. It’s true that over-customization was a significant problem in the traditional ERP, CRM and SCM world. However, just because SaaS is better than client-server doesn’t mean we need to throw out the baby with the bathwater. In the real world, business needs and workforce environments are fluid. Customization is vitally important as businesses evolve in real time, and SaaS should make it even easier to adapt the software to meet the needs of the business. And if we’re doing our jobs well, we should be able to learn quickly from thousands of customers and deliver innovation and usability improvements every month rather than every other year.
*SaaS is still too expensive for small and medium sized businesses. The SMB market is the fastest growing segment of on-demand services. For the first time ever, SaaS levels the playing field and offers small to mid cap companies the same premium tools and services employed by global corporations to increase customer satisfaction. The need to leverage efficiencies and streamline business processes is as important for the 15-employee company as the 500,000.
* SaaS can’t scale for global enterprises. This may true with some solutions, but it’s not an inherent truth for the SaaS model itself. We now have 40 customers that are deploying or have deployed SuccessFactors for more than 20,000 employees. Our active implementations range from 5 users to more than 330,000 users. Most importantly, SaaS is the only way we could deliver software like ours that’s designed for use by every employee within the company, not just one department or one class of user.
Of course, there will always be people who fear change, or claim “it was better in the old days.” However, for the millions of real-world SaaS users that now have real-time dashboards, easy-to-use software, fast access to their vendors’ innovation, and instant access to their companies’ information, those old days are happily becoming ancient history.
