In the early 2000s Siebel Systems, a traditional on-premise provider of enterprise software, was still the dominant player in CRM (Customer Relationship Management). Salesforce.com, the inventor of the Software-as-a-Service (SaaS) architecture, was still a tiny startup led by its outspoken CEO Marc Benioff, who espoused “the end of installed software.” Siebel famously said:
“There’s no way that company exists in a year.”
Fast forward a few years and Siebel Systems, burdened by expensive traditional software and services contracts as well as an aggressive sales organization that sacrificed transparency and customer success, was bought by Oracle Corp. for a fraction of its former market value.
Some years later Larry Ellison, the CEO of Oracle, was heard saying about cloud computing:
“What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?”
Fast forward again to 2013 and Oracle is in full cloud mode — espousing the value of its cloud offerings; purchasing cloud SaaS providers like Rightnow, Eloqua, Taleo and others for billions of dollars; and trying to stem the tide of new cloud-based database offerings, which threaten its core installed RDBMS business. Similarly Microsoft is attempting a massive transition of its cash cow installed Office suite from traditional software and yearly license models to a subscription business to fend off the rise of Google Applications, which are offered exclusively as a service.
Meanwhile Salesforce.com and its brethren Netsuite, Workday, etc. are worth tens of billions of dollars and growing much faster than the overall software market.
Yes the Cloud and SaaS still represent a minority slice of the overall IT and software pie, but that share is growing inexorably. It is only a matter of time, perhaps a decade or two, before virtually all applications are delivered in this manner.
Personally, being a veteran of Salesforce.com but a newcomer to the Hospitality IT landscape, it was somewhat of a culture shock to return to a world in which most software is still installed on premise and the Cloud is still in its infancy. Though this is not all that surprising since the Cloud was invented in more “horizontal” areas such as sales, marketing and human resources.
But the move toward vertical SaaS solutions is underway and Duetto is one of the companies at the vanguard in the hospitality industry. Great companies such as PracticeFusion in Health IT and OPower in the energy industry are examples to which we aspire.
Why is it that the Cloud is so compelling for applications? The answer is not simply the hardware is cheaper and lowers the total cost of ownership (since thousands of companies don’t need to purchase machines, hire administrators, or worry about installing desktop software), although these are all important.
The more fundamental reason is about innovation and the speed at which a product evolves and advances. Having personally developed installed software in the 1990s I can say the difference in productivity as a developer and a company is profound.The reason SaaS is much more productive is that it represents a different mindset for software development and operations — more akin to the consumer web. As Marc Benioff famously asked: “Why doesn’t enterprise software behave more like Amazon.com?” As consumers we don’t “upgrade” our Amazon.com — we just receive new features seamlessly. As a software developer, having all customers on the same version of a single system is incredibly liberating and productive — no more fixes to old versions. The same team runs the service and improves the software in real time. This is a fundamental architectural shift and not one that is solved by virtualization or hosting alone.
If your IT provider does not automatically upgrade your software at least once a month, then they are not truly Software as a Service. If your IT provider talks about “versions” of a system and requires a major transition from one to the next, then they are not really using the Cloud.
At Duetto our architecture is built for the Cloud from the ground up, which is why in a little over a year we’ve innovated and built a complete operational intelligence and revenue management system for hoteliers. And we will continue: each week we release minor and major new features, all while upgrading our existing customers seamlessly. When we roll out a performance optimization or a new form of pricing analytics — all our customers receive these at no additional cost and in unison. This is the reason that the Cloud will win in the long run.
Latest posts by Craig Weissman, CTO and Co-Founder (see all)
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