The SaaS Dilemma
ERP Software Advice recently published an article on "The SaaS Dilemma." That is, how enterprise software vendors have a difficult time moving to the software as a service (SaaS) model because it could canabilize their cash cow business. While this isn't news in 2010, it's interesting how closely this maps to Clayton Christensen's book, "The Innovators Dilemma." Using his disruptive innovation framework, we can gain insight into what’s to come in enterprise software.
For some background, disruptive innovation refers to new solutions that are able to disrupt existing competitive dynamics. SaaS which offers a new delivery and pricing model is a classic disruptive innovation. Disruptive innovators often target the least profitable customer segments, then over time they improve features and performance to meet needs of larger, more sophisticated buyers. In the enterprise software market, SaaS is starting to gain serious momentum.
Today we're seeing SaaS vendors and on-premise vendors in a real battle for market share. But will these large incumbent vendors succeed in making the transition? With Christensen’s disruption innovation as a guide, we can expect to see a large number of on-premise vendors stall, fade and become irrelevant over the next decade. To continue reading, visit: The SaaS Dilemma
