SaaS, Along With Crime, Doesn't Pay....According to Larry Ellison
Talk about your mixed messages. Thanks to David Powers over at GotVMail for passing this along to me. Apparently Oracle's Larry Ellison doesn't believe that SAP's strategy of going after SMB's with their Business By Design Suite is a good one. He said that the software-as-a-service (SaaS) market and the lower mid-market (whatever that is) sector is not worth going after.
Here's a quote from Ellison taken from a recent conference call with analysts:
"We've looked very closely at it, and we think it's very hard to make money because there is no synergy. To go downmarket you need a new product and new product development teams. You spend a lot of money developing a whole new product for the low end. But you also need an all-new sales force because we don't call on those customers. We don't call on small businesses, and it's very expensive to call on small businesses. It's very expensive to do ERP implementations in small businesses. The cost of sales is high. The cost of implementation is high. There are virtually no synergies in sales, marketing, and product development and support."
Due to it's large and growing presence, Ellison said Oracle is interested in the "small market" (again, whatever that means).But he said, "We just haven't figured out a way to make a substantial profit in that market. We think it's hard to make money."
I give him credit for coming out and saying it. I questioned SAP's devotion to really going after the SMB market over two years ago when they began making overtures to the SMB space for many of the reasons Ellison brings up. And I still do question it if they still define small businesses as those with up to 1000 employees. But I admit I don't know much about this new product and its pricing, so I can definitely be wrong here. I'll have to do some due diligence.
But with all this talk about SaaS not being worth their time it can't make all those Oracle CRM On Demand customers feel that great.