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This paragraph is enlightening:
"Like Benioff, Tom Siebel started his career at Oracle before setting off to
chase a new vision of what business software should be. Siebel Systems' star
rose quickly in the 1990s, but the company's fortunes started fading once other,
bigger vendors figured out how to compete in the CRM market Siebel created.
Monday's announcement that Tom Siebel will once again return to work at Oracle
means he'll spend the twilight of his career where he started, working for the
boss he acrimoniously challenged during Siebel Systems' ascendancy. On the
conference call with analysts to announce the news, Siebel sounded like an
exhausted man searching for a graceful exit, AMR's Richardson said: "He
essentially conceded that the best-of-breed software approach wasn't working.""
(link to full article below)
I bit my tongue for a while on this because I wanted the waters to settle a
bit before I put in my oars. Time's right now.
So is salesforce.com the next Siebel Systems? What does the demise of Siebel,
which ended, not started, with the Oracle buyout, portend for software's future?
Is this the end of best of breed? On premise client-server?
Interesting questions. And honestly the answer is difficult. For sure,
software buyers should stop and take notice for several reasons. Siebel was beat
in several ways. Best of breed is just one of 3 pillars that crumbled. The
other 2 are the enterprise software market and client server
applications - especially for CRM.
When you look out over the software market the leaders, the companies that
are delivering some great results, are salesforce.com, NetSuite, RightNow
Technologies. All three have a software as a service delivery model. So
certainly SaaS has now moved from 'gaining traction' to mainstream. But we have
been here before, in the 90s when Oracle, SAP, PeopleSoft and Siebel were the
greatest thing since sliced bread. I don't think that it's an accident that only
Oracle and SAP are left. They offered the broadest application set. Not the
perfect applications, as the boots on the ground can attest, but the greatest
functionality set. So when the enterprise market became saturated there was not
room left for PeopleSoft and Siebel. And Siebel took another hit because CRM
makes more sense as a SaaS offering for many companies, especially those with
large direct salesforces.
So what does this all portend for the current group of SaaS companies listed
above? First, I think that CRM is an obvious candidate for SaaS, but that is
also changing very fast. More software companies than not are looking at the
SaaS model. Client-server, on-premise computing is not going to survive,
especially in the SMB market, but I also think that it will take a hit at larger
enterprises. And the ASP model is not going to suffice, either. Let's face it,
the ASP model didn't work in the beginning and it still doesn't work. Just
because someone else hosts your applications, it does not mean that you are not
'managing' those applications. You are. And therein lies the problem.
How about the integrated suite vs. the best of breed approach. This is more
difficult to figure out, at least at this time. What's obvious though is that we
cannot assume that since best of breed didn't work in client server, it will not
work in the SaaS model. There are obvious advantages, especially for SMBs, in an
integrated suite. The question, for the future, is can the SaaS model deliver
less risk for integrating several best of breed systems? The market seems to
think that this is the case, but I am not sure. Even with Web Services and
Service Oriented Architecture, I think that integration continues to be a costly
and risky endeavor. The market will not lie though. Once integration starts in
earnest we'll hear about either success or failure pretty quickly. Stay
tuned. |
