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Larry Ellison and SaaS Software
Having done a few software as a service (SaaS) ERP implementations over the last couple of years, I've definitely become a fan of the SaaS model. I recognize it's not for everybody and every situation, however, it clearly brings a huge value proposition to many. Unfortunately, I don't think Oracle's Larry Ellison sees it the same way. In a recent financial performance discussion, Larry said, among other things:
"It's very expensive to do ERP implementations in small businesses. The cost of sales is high. The cost of implementation is high. There are virtually no synergies in sales, marketing, and product development and support ... So while we think it's an interesting market -- the small market -- because it's large, we just haven't figured out a way to make a substantial profit in that market. We think it's hard to make money. Our strategy: add more value, go upstream, sell industry-specific software to our existing customers, and we'll watch and see how SAP does going after small companies. Especially with in Software as a Service which we think is very interesting, but so far no one has figured out how to make any money at it."
What most surprises me about these statements is that Oracle is the relatively new parent of the Siebel On Demand hosted solution and Larry is personally the majority owner of soon to be public NetSuite. I think this kind of statement by Oracle's CEO forces pause by any buyer previously considering a SaaS solution from Oracle.
Posted by: Jeffrey on 09.26.07
Posted in: SaaS, Oracle, Rants
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