The SaaS Application War Will Escalate in 2017

At the start of the New Year, the one thing that channel partners can count on is that the level of competition between providers of software-as-a-service (SaaS) applications is about to become fiercer by several orders of magnitude.

The two big drivers of the competition are going to be Salesforce and Oracle.

Salesforce CEO Marc Benioff has made it clear that he expects Salesforce to be a company with a $100 billion market cap by about the end of the decade. A big driver of that growth, he said, will be the Einstein artificial intelligence (AI) platform, which the company expects to drive up adoption and usage of it cloud applications.

Benioff claimed that Einstein is the only AI engine, for now at least, that makes use of a declarative model that makes AI functionality available directly to end users without requiring the intervention of a programmer. An update of Einstein that Salesforce plans to roll out in February will drive that point home even further, he said.

While Microsoft , SAP and other vendors have a vested interest in preventing Salesforce from achieving its goal, the most aggressive player in the SaaS space, following its $9.3 billion acquisition of NetSuite, is Oracle.

Recently, Oracle co-CEO Mark Hurd revealed that not only will Oracle sell NetSuite SaaS applications aimed at the midmarket, it also will leave its own portfolio of applications aimed at the market relatively intact. The one change Hurd said solution providers can expect to see will be more backend hooks between NetSuite and the rest of the Oracle application portfolio aimed at the enterprise. Many of the organizations that use NetSuite are subsidiaries of larger enterprises that have standardized on the Oracle middleware on which both Oracle and NetSuite applications are hosted.

Obviously, Microsoft and SAP have similar SaaS application ambitions. There’s also a host of other SaaS application providers, ranging from Workday to any number of startups funded with fresh rounds of venture capital.

Whether it involves merely adopting complementary SaaS applications or replacing an entire ERP suite, SaaS applications represent a major opportunity for the channel because these projects, to one degree or another, involve re-engineering a business process. Rather than getting caught up in conversations about business models inside and out of the cloud, solution providers should embrace the complexity SaaS applications entail.

Every SaaS application invoked creates yet another opportunity for integration. The profits associated with enabling that integration will dwarf anything that solution providers might make from reselling the SaaS application itself.

At the end of the day, a certain amount of complexity has always been good for the channel. If a product is too complex, it’s hard to sell. But most SaaS applications are designed to be simple to initially adopt. It’s only when organizations discover that they need to share data between SaaS and legacy applications that things start to get complex.

Fortunately for the channel, by then, most organizations are too far down the SaaS application path to turn back.

Mike Vizard has more than 25 years of experience covering IT issues in a career that includes serving as Director of Strategic Content and Editorial Director for Ziff Davis Enterprise.



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