SaaS beats Oracle and SAP

ERP maintenance model is facing a trio of threats:
1- SaaS
2- Third party maintenance
3- Cloud vendors

SAP paid up big time for SuccessFactors in a $3.4 billion deal and Oracle bought RightNow for $1.5 billion just a few weeks earlier.

Oracle and SAP would have laughed off the importance of cloud computing just a few years ago. Now they’re talking the cloud game as much as they can.

1- SaaS

SaaS HR startup Workday is on fire with the best sales pitch in all of software: Buy our brand new HR products for 50% of the cost of your 15+ year old Oracle HR/SAP HR/PeopleSoft maintenance bill and we’ll even run it for you to keep your costs down. Every deal Workday does leads to the cancellation of an Oracle or SAP maintenance contract, which is a 95% net margin business for the legacy software providers.

2- Third party maintenance

More customers—especially those with custom code—are wondering why they should pay vendor support, which typically doesn’t cover specialized programming.

In the end, companies appear to want out of the maintenance game, but realize they have little to no leverage over Oracle or SAP. The only way out is through the cloud with potentially third party support as a stop gap.

3- Cloud vendors

CIO wanted to shed old applicatons, become more nimble and blow up their existing infrastructure. Cloud vendors obviously smelled blood.

Resource: Oracle’s hardware focus: Brilliant, bust or sideshow?

Enterprise software’s maintenance model faces triple threat

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About Ahmed

Software craftsman, programmer, developer, system/business analyst, DBA and PM.
This entry was posted in Companies, Oracle, SAP. Bookmark the permalink.

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