Why Old ERP Wine Can't Be Bottled in SaaS

SaaS = Point solutions

Jun. 29, 2010 11:45 PM

There is a fundamental shift that is happening to ‘enterprise apps' in the SaaS world when compared to the On-premise ERP world. I tried to google for ERP vs SaaS and found articles like these:

While, there is nothing wrong with these articles - I wasn't able to find one that addressed what I feel is a much more fundamental shift in the way the SaaS applications are / will be built. This thought has been running in my mind for quite sometime now and I indeed talked about this to Zinnov Research in a long research interview around 4 months ago. They did produce a great slide based on our discussion - more on that later in this blog. So, as I didn't find much success in locating articles or blogs in the direction of my thoughts, I decided to blog it myself.

In my view: A piece of enterprise software is defined by the three high level boundaries or dimensions below

Application Context
Geography / Regional Context
Industry / Vertical Context

Let me explain this a bit. 'Lease Management' system (Application Context) for ‘Real Estate' companies (Vertical Context) in ‘Middle East' (Geographical Context) is fundamentally different from the one that is needed in ‘India' and surely different from the one that is needed in ‘United States'. And, most certainly ‘Lease Management' for ‘Automobile Leasing' is quite different - I don't have to elaborate this.

www.theworldwidewine.com

ERP Suites such as SAP are fundamentally built on the premise that there is a common super set domain model which encompasses the variations for all of the 3 different dimensions of described above. These domain models are either configured - for fitment cases and customized -for non-fitment cases which is what happens mostly for large deployments like Unilever et. al. And, it takes for ever in the customization route and many times the ERP implementation fails.

If you have a step back and look at this approach - the fundamental flaw is close to obvious. No wonder there are industry specific templates from the ERP Suite Vendors to manage this mess. Obviously those have be portrayed as additional capabilities and sold to customers rather than fixes for the fundamental issues.

So, this leads to great opportunity for applications for potentially every combination of Application - Vertical - Geography; leading to potentially a mushroom of SaaS ISV growth. SaaS will lead the transition from an ‘Umbrella Solutions' to Specialized - ‘does one thing very well' type - ‘Point Solution'. This one slide from Zinnov Research sums it all for you - which I mentioned earlier in this post.On the other hand, SaaS takes a point solution approach for each combination for Application - Geography - Vertical. Kishore is CEO of ImpelCRM and my best friend says that CRM - even though a horizontal application is quite different for ‘Indian' market and they are winning deals against ‘SalesForce.com' and other competitors because their software understand the Geography very well. If this is true for Horizontal Apps such as CRM - the issue around vertical apps is much more.

What is your POV?

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About Suresh Sambandam
After an initial entrepreneurial stint for three years at the age of 19, Suresh Sambandam went on to work at Hewlett-Packard. Later, Suresh joined Selectica and rose to senior position, as Director of e-Insurance product division in a short-span. The e-Insurance division and its products were later acquired by Accenture. Suresh is a technocrat specializing in product engineering with expertise in software architecture for complex enterprise applications, inference engines, configuration engines, rule-based computing and enterprise middleware. He has applied for multiple patents. Suresh is passionate about entrepreneurship, technology startups and spends a significant amount of personal time in the start-up ecosystem in Chennai. Suresh is a member of the National Council for Emerging Companies Forum and also a core committee member of Product Forum at NASSCOM. He also does mentoring for budding entrepreneurs at IIT Bombay, E-Cell. Suresh is a regular speaker at various industry forums & academic institutions.

Suresh is the Founder & CEO of OrangeScape. OrangeScape is a platform (PaaS - Platform as a Service) to develop process oriented business applications that can be deployed "On Cloud" and "On Premise". OrangeScape supports platforms like Google App Engine and Microsoft Azure as cloud deployment option and Microsoft .Net and J2EE as on-premise deployment options. OrangeScape has 50+ customers including global brands like Unilever, Citibank, Pfizer, AstraZeneca, Fullterton, etc. OrangeScape in the only Indian company has been featured in the PaaS research reports of Forrester and Gartner. OrangeScape has been featured as 'India's Rising Tech Stars' by Forbes(US) magazine. OrangeScape was showcased as one of the 3 emerging product companies in India by Nasscom and was also awarded 'Top IT Innovations' for 2 consecutive years.