Wednesday, July 26, 2006

Enterprise software-as-service kinks

Marc Benioff's proclamation at the AlwaysOn Innovation Summit at Stanford today that the "Business Web is Here" seems a bit unfounded given a) that its not, b)'s legendary outages, c) the company's 50% drop in stock price so this year (vs. a 15% drop in the NASDAQ) and d) a similarly lackluster showing from software-as-service peers RightNow Technologies, NetSuite and others.

Meanwhile, Oracle's market value has quietly doubled in the last four years as the company has had to provide support for the whole market of enterprise software solutions. 94% of Oracle help desk calls involve integration with other applications. Oracle customers' number one business process challenge is other applications: conflicting instances of invoices, databases, etc. on multiple systems.

The challenge for both established (former darling SAP's recent downside earnings surprise, for example) and startup enterprise software companies remains unseating Oracle which is a formidable obstacle for many reasons including the still problematic software-as-service model. Open source and Web 2.0 solutions are distant alternatives given their current lack of scale, reliability, maturity and implementability for reaching serious CIO consideration. Unfortunately, enterprise software continues to be driven by CEO ego wars as opposed to an innovative look at customer needs.


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