I was at the SIIA On-Demand Conference in Amsterdam last week. I
participated in a panel moderated by Treb Ryan of OpSource, Inc. called
"The future of on-demand" with Dave Mitchell of IBM, Erik Troan of
rPath and Phil Wainwright of Procullux Ventures.
The discussion was very interesting as the panel participants had
different opinions about the future of on demand. We all agreed that
the on-demand business model will enjoy substantial growth in the
coming years. However, we did not agree about the hybrid business model
(vendors who supply both on-premise and on-demand solutions).
The majority of the participants believed that we will see many companies that will implement the hybrid model to run their business. I think that the hybrid model could run mainly for a transition period when there is a clear understanding that the company is determined to move to an on-demand business model and there is strong management commitment for this shift.
I think that being an on-demand company is a total commitment which requires a change in the DNA of an organization in every aspect of its business. The main asset of a SaaS company is the trust and willingness of their users to continue using the service. Maintaining this kind of trust with users themselves is an entirely different ballgame than maintaining it on the corporate level of your customer. The SaaS vendor needs to operate differently, where selling is an ongoing effort and less of a onetime play, and needs to focus on constantly generating user value. I think that a company needs to have one leadership with one vision and one focus.
I am sure that we will see many companies that will be tempted to move to a hybrid model as it looks as if it's the best solution at first glance. These companies will probably find themselves competing against pure on-demand companies and I doubt if they are going to win. We need to look at history and understand that when there are companies that develop technologies that are disruptive to business models, it often brings about change in the overall business landscape as well. Such an example was the move from developing the mini-computer to the PC (ask the guys from Digital, Nixdorf, Prime, Data General.....).
Having said this, some companies will still be forced to operate in a hybrid model for the long run. I suggest that they fully understand the challenge of working in a hybrid model and that they operate in two separate lines of business (as if there were different companies). This includes assigning two separate management teams (on-demand and on-premise) in order to fully pursue both avenues.
"It is not the strongest that survive nor the most intelligent, but the most responsive to change"
Charles Darwin (1853)
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