Lukas Svoboda: Strategy, Architecture, Governance & Technology

Knowing Rod, knowing what Xero is up to and knowing that SaaS is still proving to be a hard sell to many people, I find this Computerworld article very interesting where Rod disputes a US analyst’s take on SaaS. The analyst recently visited New Zealand.

Personally I generally agree with the Analyst's take on SaaS. It is still a low priority for larger firms in general and I still think SaaS is mainly stuck in the SME segment. Certainly my reading in New Zealand at the moment.

I personally think the SaaS movement will just end up forcing two things:

1. Dominant software sector incumbents to provide low cost/opex offerings (Watch the SaaS start-ups sweat when that happens)

2. More software gets offered as a web solution in addtion to desktop solutions. I think Google is probably the best model for this at the moment. They have really excelled in this area. It reminds me in the late nineties when Oracle was rabbiting on about thin clients and the end of Microsoft's dominance in software commodities. Well it still hasn't happened and Google still hasn't made it happen it despite producing some very good SaaS software. The interesting things to watch are the fact the Microsoft is investing big time in software frameworks that provide high useability on the internet. You can bet your bottom dollar they are hedging their bets and co-developing all the future products using this technology.

14-Nov: UPDATE FROM ROD (From Comments): "The article in computerworld did not accurately reflect the discussion. I agreed with Ken on many thing sand he agreed with the potential of SaaS especially in the SMB space".

Interesting comment from Rod there - Funny how computerworld distorted things! Rods comments sound much more like what I'd expect.

Thanks to Nikolai for this link. On sharetrader.co.nz there is a very interesting debate on the Xero IPO. Find it at this link. Many people taking a wait and see attitude, but also others suggesting the punt is not a bad idea.  I do think however the comments give a clear view of the risk profile of Xero and it's definitely very high. Also very interesting to note is the link to 1stplace, another NZ company offering a web based/SaaS accounting package for the SME area. So there is definitely competition to Xero aside from the traditional accounting software vendors. Also another think to note is that Microsoft currently gives away a free accounting package at www.ideawins.com – okay so it's not focused on NZ, but it appears to do a lot of the basics for free and for a small amount you can upgrade to a pro version.

Interesting discussion on NBR regarding Xero's public listing. I'm following Xero very closely to see how the SaaS SME business model works. It's interesting to see that they are going to market to get 18 Million shares for a company that at list date will only have 100 customers. Doing some quick sums at $40 per customer per month - that's annual projected revenues of $48,000 at listing. Clearing it's a bet on the future, definitely not on the "now" of Xero. I can see why some may be cooling about buying into Xero. Xero is a good concept and very interesting idea but will people really want a piece of this given the risk profile? I'm definitely waiting and watching and agree with the market sentiment mentioned in the NBR article.

I guess what worries me about the whole Xero listing is the overhyping…. Many people got burnt in the .COM boom and bust through many other hyped technology startups. Xero could well be different – Rod's experience at the helm will help but I think the market will quickly determine how successful Xero will be.