Fair suck of the sav Marge, and will ya throw another snarler on the barbie and grab me an xxxx out of the esky (sorry - just practicing for when New Zealand becomes another state of our Western neighbour).
Cool to hear that Xero have fully launched their Australian offering. Fact is that Australia is a huge market (compared to New Zealand) yet still close enough to here for their to be some similarities in the way business is done - to that end Australia, in my mind, will be a key test of Xero’s market entry strategies. It was also cool to be alerted (thanks Dan) to the fact that Diversity is being quoted on that most illustrious of sites, Computerworld - just remember, you saw it here first (by several months!)
Of course I’m looking forward to seeing them go head-to-head with Saasu - I kind of feel that they’re both distinct products with different target markets - Saasu suits a larger operation more in need of an ERP lite offering, while Xero I see as being more of a step up from the "excel or a cashbook" crowd.
Either way it’ll be fun to watch. And on another note look what came up when I did a Google search for Xero - it seems Netsuite will clutch at any straw for business!
Sometimes it’s hard to know how to take Ellison’s missives on SaaS. Bear in mind that Ellison, the CEO of Oracle, is also the founder and largest single shareholder in Netsuite (and also a major shareholder, for good measure in, salesforce.com which was founded by an ex-employee of his).
In his latest earnings call, Ellison said that the entire SaaS industry is unprofitable. He comments on the performance of salesforce.com, saying;
If you look at the leader, Salesforce.com, they don’t make very much money and they’ve been at it for almost 10 years, It’s hard to point to any software-as-a-service provider that’s doing a good job of improving its profitability
He gets a little conciliatory about the future prognosis saying;
We continue to get better at it [building revenue] and grow the business, [But] it’s not really growing any faster than our overall business. We think that’s going to change over time. But the entire on-demand industry has to get better at making money in selling on-demand software
Seems like Ellison likes to cover all his bases, it’s hard not to think however that his comments aren’t helpful for his own SaaS holdings, and even less helpful for the myriad of SaaS start-ups out there trying to get a toe in the door - especially those trying to give enterprise a nudge.
In my habitual blog trawling, I came across a post by Stuart Bale, MYOB’s man behind their On-demand accounting offering. In the post (dated March) he spoke with some excitement about two developments;
He’d written the first post on the first official blog out of MYOB
He was launching MYOB’s On-demand offering
I have already posted about MYOB’s BusinessBasicsOnline (BBO). In a tragic oversight the URL was not reserved and Xero had managed to snaffle it up and point it to their own site (a situation now remedied apparently).
I was pretty excited with the advent of BBO. MYOB is a major Australasian player with a majority in the market, this momentum, coupled with an on-demand offering could prove incredibly compelling. I’ll review MYOB’s offering a a later stage - this isn’t the post for that.
Looking at Stuart’s blog now, I see that much changed in the space of two months, he’s now firmly ensconced at Xero having moved on from MYOB.
No one can know his reasons for moving but I’ll go out on a limb by guessing that it may have something to do with trying to disrupt an existing business model from within. I’ve posted previously about the pain that traditional software vendors must feel trying to morph to a SaaS model - it threatens their traditional revenue models, it cannibalises sales and it demands an entire new sales strategy - unless the ISV is 100% behind it, there is a difficult road to travel. It’s hard and frustrating innovating in that sort of environment.
But there is another way - so long as the incumbent is brave enough. There is no technical reason that an existing player cannot create a fantastic SaaS offering - the barriers are primarily cultural. I like to think of it as similar to the concepts espoused in my seminal (in my eyes anyway!) posts here and here about getting the best of OpenSource and the best of SaaS.
So here’s the Diversity Limited 5 step plan to morphing your business, consultancy roles greatly accepted;
Accept that disruption is going to occur and identify that it’s better to disrupt from within than without
Accept that for disruption to occur, control needs to be given up.
Dedicate resource - people, money and time - to building a dev team charged solely with finding the “golden disrupter”
Accept that disruption will hurt short and medium term revenues, but will ensure long term survival
Once the product is there, don’t try and subvert it to suit the current status quo
Don’t even think about having the same sales personnel or strategies selling the traditional and the disrupting offering - it won’t work
For anyone who wants a lesson in how to do it - Just look at Larry Ellison and Netsuite - not the product itself but the way it was developed with independence and long term focus.
Interesting that British Telecom has entered into a partnership with Netsuite to provide Netsuite’s business management solution to BT’s 1.6million business customers.
BT is also partnering with SugarCRM to provide their CRM product to users.
Some might see these moves as being outside a Telco’s sphere of business, but even plain old telephone services are SaaS of a sort, providing more SaaS products to their existing customer base makes sense.
BT also has the opportunity to combine their own communication products into the SaaS offering so that a salesperson can, for example, click to call from within SugarCRM, or an accounts receivable clerk can send a debtor SMS reminder through Netsuite.
I understand that BT is not only on-selling, but also providing customisation and support services for the solutions they’re offering.
It’s a great model which will help replace some revenue BT is losing to telco competition, and build themselves into a services provider for the new century.
A great move and one to watch for in our own market.
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