The chatter around Harry’s comments about SaaS continues — this time it’s the interview of Dave Duffield on Bill Kutik’s radio show. I actually liked the way Dave presented it. The dialogue continues to help me refine my thinking on why what we’re doing is truly differentiated. To wit, a few facts:
- 85% of the companies that have bought our new talent management products have opted for a licensing model other than a subscription. Why? Because customers asked. They want to own the software that they are acquiring for such a strategic purpose (not so important for payroll processing, I’d say…).
- 100% of those same companies have opted for a managed service delivery model — a uniform version of the software, fully managed by Lawson. So they’re enjoying all of the benefits that Dave said were so important. Not one customer is on the ‘patch-fix treadmill.’ From a delivery perspective, it’s SaaS, but because it’s not sold as a subscription, I guess the purists would criticize me for labelling it that way, so I won’t.
- 75% of our customers in the pipeline have expressed a preference to own the software vs. renting it via subscription. I anticipate the vast majority of them will still opt to have Lawson manage the environment — the benefit of the SaaS delivery model is real, and customers will continue to opt for it in large numbers. It’s paying the license forever that doesn’t make any sense.
At the end of the day, customers buying talent management solutions want choice. If companies like Lawson and Workday deliver great value managing the environment and application, why would they want to do it themselves? But when the software takes hold in the company and offers mission critical benefits, the value of having an ownership stake in that product will be beneficial. From a cost perspective, because they can pay for just the portions that provide ongoing value (staying off the ‘treadmill’), Lawson clients will reap a more attractive long-term return on their investment.
Note to Bill Kutik: as far as backpedaling, I’m not sure I see it. While we are offering customers more options, they are all centered around delivering great high-quality software applications to customers, advancing our economies of scale around managed care and building the kind of market share that will ultimately define Lawson as the gorilla in this market. SaaS or otherwise.
Perceptive HR Technology 
Thanks for the great statistics, Larry. Your hybrid model (perpetual license but hosted) makes a lot of sense for some customers. Especially given the admission in the past by ADP that after paying monthly for five years, customers would have been better off financially licensing the software!
I presume customers do not get to customize it, only configure it. Otherwise, you’d be on the Vurv treadmill and look what happened to them!
Thanks for the link to the show under “interview” above. Being severely color-challenged, I didn’t see it right away. Your readers can also download it for free from the iTunes store by searching for The Bill Kutik Radio Show.
Bill
One of the key components of a SaaS delivery model is multi-tenant not the ability to host the solution for customer. During this election period it appears that Lawson has taken on the characteristics of many politicians, talking out of both sides of their mouths. The architecture of the solution is what makes a product different, not the fact Lawson has the option to host the solution. On one hand the CEO of Lawson says it is a fad, on the other hand the VP of HCM Strategy continues to feel the necessity to explain away their CEO’s comments. Suggestion for Lawson, get on the same page.
The flaw in this argument is a purist belief that SaaS requires multi-tenancy. SaaS is a delivery model, not a software architecture, and there are many smarter people than I who have independently validated that assumption.
There may be many things that keep me awake at night, but alignment with my CEO isn’t one of them…especially on this topic.