Sunday, April 13, 2008

Innovator's Dilemma

I drank the Kool-Aid a long time ago - I'm convinced that Software as a service (SaaS) is the next phase in the computing revolution. A lot of established software vendors aren't so sure:

The future is a combination of local software and Internet services interacting with one another. Software makes services better and services make software better. And by bringing together the best of both worlds, we maximize choice, flexibility and capabilities for our customers. We describe this evolutionary path in our industry as Software + Services.


SAP has pioneered the “isolated-tenancy” model that combines the high availability and low risk of a single-tenancy approach with the efficiencies and deployment speed of a multi-tenancy architecture.


Today's CRM deployment options include:
  • On-premises CRM
  • Privately managed on-demand CRM
  • Shared on-demand CRM
  • Hybrid CRM

These companies are trying to convince potential customers that SaaS is a feature, or an option, instead of the way of life that it clearly is. Microsoft, Oracle and SAP are caught in the classic innovator's dilemma - they can see the future clearly, but they can't invest fully in SaaS because doing so would cannibalize their packaged software revenue streams.

History has not been kind to established industry leaders when a disruptive innovation comes along - just ask Kodak.

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