Wednesday, November 03, 2010

Not Sweet

Some great insights from Forrester's Tim Harmon in a writeup on SMBs' use of open source in a shift from traditional IT to what they call "business technology" - including mission critical apps like ERP.

One of his points will surprise some: "SMBs are not ramping software-as-a-service (SaaS) as fast as large enterprises and are taking greater advantage of open source software."

Harmon particularly notes that SMBs are "suffering from monthly SaaS subscription-fee indigestion." Boy is he right about this - we hear this a lot at xTuple now. People bought in to a SaaS solution a year or two ago, lured in by a promotional rate, then are surprised when the renewal the following years is double or even triple what they paid before. We just signed a new customer today that was featured prominently in promotional activities for a leading SaaS player; believe me, they were ready to move.

There's a lot to like about software as a service, to be sure - but it's also true that it does very little to ameliorate the persistent problem of vendor lock-in, and the bad behavior that inevitably follows a tilted scale like that.