Sightings in SaaS

Does information technology need to be so complex?

To answer the first question we must ask another:  What drives complexity?

Vendors tell you that they respond to customers, and it’s true that many customers demand that software meets their highly idiosyncratic requirements, that’s true, and requirements drive complexity. But is it also true that vendors for many reasons welcome their customer’s desire for more complexity, even encourage it. But why?

Would the question be easier to answer if we replace ‘vendor’ with ‘employees working under the same flag’? You probably see where I am going with this. The way many employees think about their employment reminds me of the story about economist Milton Friedman who was taken to see a government construction project in a third world country. Why, Friedman wondered, are the men digging a canal with shovels instead of earth moving equipment? He was told that using shovels created more jobs, to which Friedman replied, “Then why not use spoons?”

Many employees who work under the same flag understand that adding complexity is in fact the equivalent of digging a canal with spoons. But, you might ask, management exists to make sure that employees don’t put their own needs before the customer’s, right? Well, management also understands that complexity helps to increase their software’s economy. As complexity grows, professionals and experts show up to help manage it. The more professionals and experts who show up the more cachet the software wins in the marketplace.

Complexity is also a prime driver of customer tie in. After you spend 10 times the license fee to implement SAP or Oracle applications, the probability of your changing applications in the mid-term, or even long term, future approaches zero. Or consider desktop office applications. You not only purchased the licenses but then you trained several hundred or several thousand users. The probability you are going to move to free OpenOffice applications much less on-demand versions of spreadsheet or word processing apps is nearly nil. By the way, have you seen anyone providing training for the free OpenOffice apps? Some probably exist, but you don’t see them around very often.

Recently Microsoft started offering its office apps online, calling it Office 365. I’m not sure how many users they will find for their service, but they have provided plenty of material for the blogosphere. So far, commentators who have tried the service, or tried signing up for it, have a single word to describe the experience – ‘complexity’.

The thing that stood out to me as I read the articles is that the business thinking that motivates so much of what Microsoft does sits in the middle of Office 365. They tied in as many of their applications as possible, for example. Outlook you can understand, but Silverlight? They are also offering a complex pricing plan that encourages users to sign up now for as much of the service as they can afford, since if you decide to change later you cannot migrate your documents.

With the complexity of the interface and the difficulty of installing and using it, it’s only a matter of time before there are training courses devoted to Office 365. You can see legions of corporate users marching into training centers eventually.

Meanwhile I have also caught up on reading some of my favorite online writers, and one of them, Brian Sommers wrote a great article about SAP and Workday; the old on premise ERP giant SAP vs the young SaaS Workday. The question Sommers asks is do legacy ERP vendors have what it takes to build applications for the future requirements of business? It’s one thing to address social, cloud and mobility; these are important notes Sommers. But perhaps even more important Sommers states:

The big changes that businesses are facing are centered around: extraordinarily rapid, curvilinear innovation and changes impacting regulation, competition, finance, etc. The speed of business is not just increasing; it is growing at a skyrocketing pace while the ability of ERP solutions to change is approaching an asymptotic path. The gap between the speed of business and the speed of ERP is expanding not contracting at many firms.

Our question here is do legacy ERP vendors have the ability to innovate in their core apps, or are they outmatched by the complexity they have built in over time. Go back to mobility for a moment. NetSuite order management module is fairly straightforward, and putting an app on a tablet or phone that allows for order entry is a challenge, but one that has already been met. Putting Oracle’s order management system on a phone and making it usable for a saleperson is an order of magnitude more difficult. It can be done, but it’s complex, and takes a lot of cash and time.

In another good read we came across Bob Warfield’s post on a new payment service for mobile called Square. They just raised 100 million in venture capital. This is where the economy is growing and going in many ways. How long will it take NetSuite to integrate Square? Will SAP or Oracle even bother?

We have heard more than once that SaaS software is not ready for the big leagues, that it cannot manage the complexity of real business. Our question is can complex legacy software meet the exigencies of their client’s marketplace today? Or is legacy code buried under a mass of complexity and tangled spaghetti that prevents the old on-premise ERP vendors from quickly adapting to the market’s requirements? The key to survival is not the rote hunting of the slowest mammals, but adaptation. Only those who are able to adapt to a changing environment are going to make it, and adaptation requires quickness, agility, flexibility – all attributes that are the antithesis of complexity.