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When IT Business Edge reported Oracle's latest earnings, which were down but nonetheless beat Wall Street's expectations, it cited a San Jose Mercury News story that said, essentially, that Oracle would have been totally screwed if not for the maintenance and upgrade fees it collects from its customers.
Wonder if the lack of such fees -- or the need for fewer of them, at least -- has anything to do with the recent collapse of some software-as-a-service companies?
IT Business Edge blogger Dennis Bryon wrote about the demise of Flowgram earlier this month, and now LucidEra is going belly-up. This TDWI article largely faults an ugly venture capital environment rather than the viability of the SaaS revenue model for LucidEra's problems. It quotes Cindi Howson, a principal with BIScorecard.com, who also implies that IT's reluctance to embrace SaaS isn't helping.
Article sourced from www.itbusinessedge.com, click here to read full story.
Discussion:
Kevin Spurway said:
In theory, if the SaaS provider has priced its solutions properly, then charges for the equivalent of maintenance, support, and updates should be factored (added) into the single SaaS recurring fee.
From this perspective, I don't think there is anything inherently wrong with the SaaS model from a pricing standpoint. Certainly Salesforce.com and other companies have made it work. It seems more likely that LucidEra's problems were more fundamentally related to lack of demand for their solutions. This ties directly to Cindi Howson's hypothesis. It is difficult to fault the ugly VC environment, considering how much LucidEra was able to raise successfully.