Software Business Next Trend ?

Check out other previously mentioned trends.

This topic is inspired by my prediction that software business getting harder to do. The reason is that the marketplace expects prices for technology and solutions to keep dropping while inflation keeps happening.

Even though the demand for software has grown from conveniently-efficient-to-have to become a necessity (which is good), this will create a bigger gap in terms of inequality. This means that the big boys will eventually control majority of all market share. This is bad for the society.

Anyway, everybody have to move forward. So I have figured that there are two solutions:
  1. Generic version with auto-update - for any software solution that you are having, try to make it more generic and become more horizontal. And you need to find time and resources to adopt the auto-update feature like what is happening in Microsoft.
  2. Web based SaaS (software as a service)
I would like to analyze SaaS (software as a service) potential in Malaysia.

First of all, the term SaaS (software as a service) can mean anything. The worthy meaning of it is software-on-demand, which means pay per use.

Most of us are not familiar with this term because of the Microsoft evolution and some people called it Microsoft age. Yes, since Windows 95, the whole earth is part of Microsoft age till now. Perhaps things will change later but we cannot change the past.

The Microsoft business model is very different from software-on-demand model which proves to be successful.

Software-on-demand means when you need it, pay for it and then use it. When you don't need it, download all your data and close the account. This is very much similar to paying for a coffee in Starbucks in order to do some web surfing.

If we look at successful SaaS providers like ZoHo,37 Signals,, Intuit and etc. They all target small and medium enterprises in the USA and western countries.

37 Signals is reported to have more than 3 million customers.

My guess is that for big enterprises to use 'SaaS', the ROI scenario may be different.

Well, I haven't heard that SAP, Oracle Peoplesoft, Siebel and etc are offering SaaS yet and even for whatever that is worth it, they don't have to because they are already making so much money and still going.

The idea of SaaS is to reduce the entry cost for adoption of ICT solutions and big enterprises doesn't really need it.

However, in Malaysia, there isn't a trend yet for small and medium enterprises to adopt SaaS. There are two reasons:
  1. There are many service-oriented solution providers who are willing to provide services to such enterprises at the lowest entry cost ever.
  2. There isn't much local SaaS providers in the market who can survive the investment required before a sensible amount of profit are visible to carry forward.
There is however, one specific industry which the SaaS model seemingly work; the logistic industry. For some reason, there are solution providers who provide solutions for clients based on transaction basis. One of the reason is that it makes sense to quantify a transaction in the logistic industry in a tangible way. Means that if I have an order (for logistic), it will sure make money (clean profit). However, this may not the case for other industries.

This suggests that the ICT budget for small and medium enterprises in Malaysia is very small comparing to USA.

Hence, the Microsoft model really works in Malaysia because one gets to buy one-off and gets to receive free updates. I am still receiving updates for Windows XP until today, and that is like a 9 years old product. And this is what I want to suggest.

SaaS may work in Malaysia if:
  1. Do not target small and medium enterprises, target big enterprises.
  2. Charge big enterprises the price range of what others are charging for small and medium enterprises in USA and western countries.
Ok, maybe it will not work for the top 10 percent of big enterprises in Malaysia, however, it may work for the 90% of those classified as big enterprises in Malaysia.

However, for me, it should work for all, because in Malaysia, we are all Malaysian.

The one company that I know who is betting on SaaS is SAS. As at to date, SAS has two products that are already SaaS.
  • Business Intelligence
  • Campaign Management
Their upcoming is Social Media Analytics on SaaS platform. According to SAS, SaaS is good for.
  • Low entry barrier (plug and play)
  • Low upfront investments
  • Faster time to market
To my interpretation, SaaS will break the barrier of enterprise budget and monopoly.

Anyone wants to challenge my idea just drop me a comment.