November 3, 2010
Recently Frank Scavo wrote a great post regarding what he determined was the key success factor for SaaS suites: functional parity. The thesis of Scavo’s argument was that, until cloud vendors provide true functional parity with on-premise solution, a “rip and replace” will simply not be viable. As he said in his post:
there is one area where SaaS providers still lag behind: functional parity. For full-suite ERP, there are still precious few SaaS providers. And those that do attempt “full suite replacement” still have major gaps in their functional footprint.
There are two issues that Scavo’s post raises – firstly the availability or otherwise of “out of the box” vertical solutions. Second is the ability for partners or customers to create their own customized offerings built on top of the ERP solution.
The first issue is rapidly being solved. NetSuite in particular were eager to show off the manufacturing specific application that they’ve built on top of NetSuite – having taken a quick look t the offering it seems to offer manufacturing businesses an incredibly high level of functionality that should see all but the most complex of operations satisfied. And for those who don’t.. there’s always the platform as we shall see later in this post.
Not to be outdone, Plex also offer a specific product for manufacturers – Scavo tells of one win for Plex where a business operating in 15 countries, with 22 separate manufacturing sites, couple of distribution centers and multiple engineering centers are consolidating all of their MRP/ERP functionality onto Plex.
Finally, and perhaps most importantly given that almost every business has particular nuances in terms of functional requirements, come the platform plays. I’ve spent time recently talking with a number of vendors about their product offering – NetSuite took the opportunity at SuiteCloud APAC to show off the flexibility of their platform. Intacct used their Advantage2010 conference to tell partners of their platform intentions, while FinancialForce, SAP and Acumatica all offer customers and partners the ability to create customized offerings within their products.
So – where does this leave us in terms of functional parity? As I said in a comment to Scavo’s post:
As a SaaS evangelist since early on, I’ve battled barriers to adoption, steep onramps and general lethargy frequently.
I generally agree with your contention however I do think there is more to this than just the functional parity discussion. As an example, professional services automation (PSA) has been pretty much at feature parity (as an example, NetSuite ERP/CRM plus OpenAir) for quite some time now, yet still adoption is good… but not stellar.
I’d class the functional gap as step one in the due diligence process – it’s the traditional feature comparison and until recently the traditional vendors have been able to rely on this to “win the deals”. However functional parity is now the norm in a number of verticals and the traditional vendors are resorting to other means to slow adoption – concerns round jurisdiction, security, vendor viability etc
In other words – functional parity is either a reality or exceptionally close to it for many cloud solutions. As such we’re seeing a dual approach from the traditional vendors – firstly many are cloudwashing and attempting to convince customers that their traditional on-premise products give the same benefits that cloud solutions do. The second approach is one of FUD, trying to convince customers that the risks involved in choosing an “unproven, inflexible and risky” cloud solution are simply not worth it.
Either way the tide is turning and over the next 12-24 months I expect to see a huge increase in the adoption of enterprise level cloud solutions.