The Collapse of SaaS? Uh, Puhleeze!

Lawson Software CEO Harry Debes, in a recent story that I read, says that SaaS will collapse in two years. That’s right, collapse.

Debes says he’s lived through the “on demand” phenomenon three times in his career (first when they were called “service bureaus,” second when they were called “application service providers”, and now SaaS.

“But it’s pretty much the same thing. And my prediction is that it’ll go the same way as the other two have gone—nowhere,” added Debes in the interview. “SaaS is not God’s gift to the software industry or customer community. The hype is based on one company in the software industry having modest success. just has average to below-average profitability.

“People will realize the hype about SaaS companies has been overblown within the next two years.

An industry has to have more than just one poster child to overhaul the system. One day will not deliver its growth projections, and its stock price will tumble in a big hurry. Then, the rest of the [SaaS] industry will collapse.”

Wow, this guys sounds pretty pessimistic, and I think he’s just dead wrong. Kind of reminds me of Oracle CEO Larry Ellison’s comments about the cloud. He even refers to Ellison in the article.

And I’m not the only one to feel this way. Check this out in the comments part of the article from a reader, Dklchang: “While it might be good for Lawson’s bottom line and investors, it has no benefit to the customer that’s dealing with an ever web-reliant workforce. Sure, Lawson’s ERP niche is geared toward dinosaurish industries, but that’s not what SaaS is addressing. It’s about immediate results and higher productivity, not year-long engagements with yet another entrenched vendor you’re stuck with.”

Anyway, I bring this all up because I believe just the opposite; that cloud computing and SaaS will continue to grow in popularity, and there is certainly plenty of evidence from studies showing companies and schools are investing more in SaaS on the cloud. Plus, even from our own success as a cloud-based monitoring service, there can be no arguing that this is the future of IT as well as consumer computing.