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Director, OpenShift Strategy at Red Hat. Founder of Rishidot Research, a research community focused on services world. His focus is on Platform Services, Infrastructure and the role of Open Source in the services era. Krish has been writing @ CloudAve from its inception and had also been part of GigaOm Pro Analyst Group. The opinions expressed here are his own and are neither representative of his employer, Red Hat, nor CloudAve, nor its sponsors.

3 responses to “Acquisitions, Trust And Cloud Services”

  1. JoeTierney

    Thank you very much for the post Krish.

    The disruption to DimDim users is a significant event. However, the acquisition and shuttering of a software platform is nothing new and certainly not specific to SaaS. Some acquisitions are made to obtain the customer base, some the technology – this apparently the later. Many an on-premises customer has been disrupted via the acquisition of their vendor(s).

    I recently came across an example in which a larger enterprise made a multi-million dollar capital investment in a content mgmt platform from a very large traditional on-premises vendor. Several months later the vendor announced the platform, itself an acquisition, would be sunset and further development would cease.

    I know one point of view would be “well at least they own the asset”. Yes, but. They own the right to use it but not sell the asset. And while depreciation is applied, it is misleading as the software, if unused, is always worth nothing – regardless of when this occurs. This particular platform is also “dead” as vendor investments have effectively ceased. The software may have been purchased like an asset and treated like an asset from an accounting perspective but assets, in the traditional sense, have value in and of themselves – software does not.

    As you mention, another point is that terms of the contract should address such issues. Very true and this applies in both the on-premises world and with the SaaS model. Regardless, if we’re going back to contract terms, we have a problem as well as expenses associated with disruptions to the business. Perhaps we get our money back, but we didn’t want the money – we wanted the software solution. A large vendor, on-premises or cloud, is going to make decisions that impact some customers negatively. I do not think we’ll see this process become more “responsible”. In fact, I think we’ll see more disruption as public cloud vendors continue to grow and compete more directly with legacy on-premises vendors. Every relationship ends, usually the customer ends the relationship and sometimes the vendor ends the relationship, how each party decides to move forward is their responsibility.

    DimDim customers on the free plan made zero investment in DimDim – how can they expect an investment in return? Customers on the month-to-month plan made a month-to-month commitment to the relationship, why would they expect more? Customers on annual subscriptions are receiving the services in which they invested as well. No one is being short changed.

    Personally, I think these common events in the software business favor the SaaS model. DimDim customers do face the expense associated with migrating to another service (and 30 days is an acceptable window for a web conferencing software but for an ERP solution would be totally unacceptable). However, in the on-premises example the customer has a software platform that is now quickly becoming stale (not a big deal 10 yrs ago but much more painful today as the pace of change has picked up significantly), escalating support costs associated with continued support outside of the sunset date, capital investments in the infrastructure to support the solution and ultimately the same problem as the DimDim customers – the need to find a new solution.

    On a side note, DimDim was a very cool service and, assuming Salesforce can get it rolled in, will be an awesome addition for customers.