Sap’s acquisitions of SuccessFactors and now Ariba are examples of rapid consolidation of SaaS providers by large established on premises vendors. Oracle’s acquisition of Rightnow, and Taleo are further cases in point. Conventional wisdom was the cloud would be so disruptive to software industry titans that their long term viability would be questionable. Many forgot the lessons of the “.com” boom and bust. Back then the main topic of conversation was the death of traditional Brick and Mortar companies because of high flying “.com” e-tailers. For sure, Amazon obviously survived the bust (as did others) but so did many Brick and Mortar companies who learned how to adapt.
The Brick and Mortar companies leveraged strong supply chains and their physical stores (in-store pick up) to their advantage. Similar circumstances are now playing out with application vendors where hybrid deployments (on premises and cloud) are becoming more important. Hybrid deployments provide an advantage for established on premise vendors. There is no doubt there will be cloud pure plays but for the foreseeable future on premises capabilities will continue to be important.
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