I just read the announcement from Wipro and Oracle about their Cloud platform for software companies in this article, Wipro Offers Cloud Computing Service, from Mary Hayes Weier of InformationWeek. According to the announcement, Wipro and Oracle are providing a service which will let software companies offer their existing applications as SaaS in a multitenant model. They claim they can move your apps into the Cloud at 50% of the cost.
Wipro is, undoubtedly, a very smart company. So is Oracle. And it definitely makes sense for two smart companies to generate some headlines. However, that’s all I see in this news item – no more. We only wish moving a software company and their customers to a SaaS model was that simple. I would understand if they were talking about providing manpower to maintain an app at 50% of the cost (that is the core business of Wipro – providing cheaper resources in India for tasks that are commoditized). We, at Navatar Group, live and breathe this every day (we help software companies move to Force.com, salesforce.com’s Platform-as-a-Service).
So what is the big issue, you may ask? The most important issue is that SaaS is more than just a technical platform. It is a business model to help you provide a “service”. A software company will die sooner if they move their existing software to a SaaS platform in this fashion. They will cannibalize their existing revenue, tick off their salespeople, lose their customers to startups and will be writing checks forever to meet daily customer demands.
Cloud Computing is a paradigm shift. A software company mustn’t jump into the SaaS model just because it’s cool and everyone else is doing it or even because it’s 50% cheaper now. They will probably survive a bit longer if they stick to their core competency – selling a “product” as opposed to providing a “service”.
To learn more about the issues faced by large software vendors like Thomson Reuters and CODA that have done this successfully, download this free whitepaper: