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For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

Archive for August 28th, 2008

Headline: Lawson CEO Debes Predicts the End of SaaS in 2 Years!

Posted by Bob Warfield on August 28, 2008

I heard via Enterprise Irregular Anshu Sharma that Lawson’s CEO Harry Debes has predicted the demise of SaaS in 2 years.  So I sez to myself, “Self, this is really bad, you work for a SaaS company, you blog about SaaS, and you have a lot SaaS company stocks in your investment portfolio, and it’ll all be over with in 2 years.”

So, I figured I’d better go read more about Debes’ prediction.  It seems the salient issue is one of profitability.  Namely, SaaS doesn’t have any.  Debes’ waxes eloquent about how Lawson dodged a bullet by not entering the SaaS market and this has made them so much more profitable. 

So, I quick light up Yahoo!Finance and check it out.  Lawson is selling $850M in revenue a year and their EBITDA is $97.54M.  Yay!  Hmmm.  Better check  It’s listed as $970M in revenue and $78.72M in EBITDA.  Hey wait a minute Harry, you’re more profitable, but not a lot more profitable. 

Well what do the analysts think?  Looks like they’re predicting annual growth of 30% for Lawson and about 43% for Salesforce. 

Well maybe this is all just a Salesforce aberration and other SaaS companies can’t match the numbers.  What about my other favorite, Conquer?  Back to Yahoo, and it looks like they’re selling $194M and their EBITDA is $42.72M.  Wow!  They make half as much EBITDA as Lawson on 1/4 the revenue?  Who is the profitable one now?

What to make of it?  Looks like Harry Debes may have gotten away from his handlers just long enough to announce a completely ridiculous prediction when he said the SaaS market would collapse in 2 years.

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Vinnie Mirchandani says SaaS will survive because it’s what customers want.  I couldn’t agree more having talked to customers after having given them a choice of the same product SaaS or On-premises.

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