You know it’s time to pay attention when the big boys make a move. The most recent indication that the cloud is hurting traditional software offerings is an acquisition by SAP. They went after web-based SuccessFactors.
The fish that got swallowed up for $3.4 billion is a 10 year old Silicon Valley based human resource software company. Make that a Software-as-a-Service (SaaS) company. A much different income model than SAP was founded upon 40 years ago.
Another biggie, Oracle, agreed to shell out $1.4 billion for an online customer-management software company, RightNow Technologies. Oracle is also planning to create new versions of its programs that would run online. However, the competition for cloud-based applications is beyond simmer and may reach the boiling point soon. Existing traditional on-site application companies are hard pressed to turn out full function cloud apps quickly enough to meet the challenge.
Oracle and SAP apparently paid premium prices for their acquisitions, but indicated that cloud services are highly sought after. Businesses that previously were concerned about using the cloud for numerous reasons, security being one, have forgone their worries. Cheaper and easier ?to-manage solutions have won them over. Companies accustomed to getting money upfront with a license fee when selling a traditional software solution must adjust to the idea of on-going income in the form of subscriptions to online solutions.
Sales techniques, customer relations, income models will be feeling the change as developers move into the cloud. Giving product away, like what?s called a puppy-dog sale, hasn?t been the technique favored by off-the-shelf packagers. Life in the cloud is going to be a new experience for some old dogs.