Do Believe the Hype

I’m just wading through my mass of Google alerts and I found a really great article on ZD Net by Cath Everett called Five cloud computing myths exploded.

She says that Cloud computing is “one of the most over hyped phenomena to have hit the IT industry in a long time”. There’s certainly a lot of hype surrounding the Cloud, and specifically SaaS. But that’s because it really is a game changer. If Microsoft say they’re making it their #1 priority, it’s got to be pretty big.

As regular readers of this blog will know, the UK’s biggest software firm, Sage, have also made a move on the SaaS accounting space. So do believe the hype.

The article talks a lot of sense. There’s only one point I disagree.

On “Myth 4: Flick a switch and your IT shifts to the cloud” she says:

The reason why cloud services are comparatively cheap is they are not customized for individual clients, which allows providers to take advantage of economies of scale to reduce costs

If I was writing a list of reasons why cloud services are so much cheaper than traditional software, that reason wouldn’t feature anywhere near the top.

Firstly, there are no CDs to produce or boxes to ship or middlemen (retailers, distributors, etc) to pay.

Secondly, there’s only one copy of the software – making support a doddle. Id hate to have to support thousands of users using different versions of KashFlow. It’d be a nightmare. With them all running off a single-instance on our own hardware, it’s easy.

I remember a few months ago I was having lunch with the former Chairman of a very (very) large software company. His question was “How can you possibly make money from SaaS?”. My response was “How can you not make money from SaaS?”