Michael Maoz

The first thought an intelligent reader would have encountering the post title is that this is hyperbole meant to grab attention. Were this only the case.  But it is not. I have conducted six client conversations in the past three months with businesses that complain about the high cost of software as a service (SaaS) in the Cloud. It has taken five years for companies to awaken to the thought that their calculations about the cost and benefit multi-tenanted CRM applications may not have been accurate. Worse still is the realization that they hadn’t properly run the TCO for five years in the first place.

What is the deal? Well, many of the buyers of SaaS for “CRM” were buying it for sales force automation.  To be specific, the average small sales force with 1-25 users is likely to be happy with the move to SaaS / Cloud applications. They got new interfaces, better configurations, ease of deployment and ease of maintenance. Larger organizations trying out SaaS apps for sales and customer service are not necessarily experiencing the same result. For you the main pull of SaaS was not the “Cloud”  but the fact that so many of the alternatives were either too complex for your needs or disappearing as products from independent companies. Siebel Systems was both. Saleslogix, Saratoga Systems, Pivotal and Onyx all went under new ownership.

Most large sales forces are almost nostalgic for the days when you could buy a perpetual license for an SFA user and pay $800 one time, and then 18-20% per annum maintenance. Today, under the SaaS model for MSB and large enterprise they are paying $840 as a yearly subscription – at a minimum. Atop that are integration software fees, mobility fees, data storage fees, incremental price increases for subsequent versions, and professional services fees.

And regardless of whether the software is SaaS multi-tenant, or hosted, or client/server, there is still very little research into new functionality. The vendors will tell you that they do not want to ‘bloat’ the product. There is something to that. However, the CRM sales and service applications are still largely data displays. There is little business logic, few business rules, essentially no integrated real-time decision support, collaboration, or extension out to the mobile user.

While innovating around the technology delivery model is terrific and has opened up wonderful new possibilities, I am not hearing the cheers from the average sales or service employee. They are mild about the applications. They are pleased that the interfaces and configurability are a big step forward. That is like saying that your portfolio is up 30% from January 2009 to January 2010, rather than looking back to where it has fallen from the peak.

From the point of view of enabling more intelligent interactions and decisions for sales and service people, we are still squarely in the early era of value.  It is a good start. Nothing more. In the film “Annie Hall,” Woody Allen describes two people having lunch, and one says: ”Boy, the food at this place is really terrible.” The other one says, “Yeah, I know; and such small portions.” Most days this is how clients are describing their zeal for their current SaaS CRM offerings.

I’m off until 8 August and ‘intentionally unplugged’ for a bit.

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Category: Applications Cloud CRM Innovation and Customer Experience IT Governance Leadership SaaS and Cloud Computing Sales Force Automation SFA Strategic Planning Vendor Contracts     Tags:

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