One of the most exciting developments to hit the enterprise software world in decades was the rise of SaaS. Companies like Salesforce.com blazed a trail that built enormous amounts of wealth and improved the lives of end-users.
Prior to SaaS, most enterprise software was sold based on perpetual licenses, to CIOs and IT departments, with little to no input from end-users. The result was generation after generation of shelfware.
In contrast, SaaS made it easy to adopt new software packages, especially for line-of-business managers, shaking up what had become a rigid market dominated by three players (Microsoft, SAP, and Oracle).
A second wave of SaaS companies rode the freemium business model to even more rapid success, as exemplified by the “Box Brothers,” Box and Dropbox. These cloud storage companies used the consumerization of the enterprise to build 9-figure businesses.
There’s only one problem–as Box and Dropbox turn their attention to true enterprise sales, they’re going to find their way blocked.
Quietly, “Enterprise SaaS” has been beaten to the punch by “Hybrid Cloud.” These companies provide a web/mobile front end that runs on a back end contained in the customer’s data center.
CIOs have jumped on hybrid cloud like a starving man on a pizza. SaaS promised to make datacenters (and the CIOs who run them) obsolete. Hybrid Cloud lets them offer the CEO and business heads SaaS-like apps (consumer-y, web/mobile) while still keeping the keys to the kingdom (the datacenter, hardware, and data).
Faced with a choice between paying the Box Brothers $1 million+, or spending most of that on their own datacenter and staff, which do you think the CIO is going to choose?
It ain’t pretty, it ain’t in the best interests of the business, but it’s going to happen.
(Cross-posted @ Adventures in Capitalism)