SmoothSpan Blog

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

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 Salesforce.com.  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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8 Responses to “Headline: Lawson CEO Debes Predicts the End of SaaS in 2 Years!”

  1. Or may be he is right. I think virtualization is hyped too – its mainframe multitasking with a new name.

  2. [...] are definitely SaaS companies that are making money, even good money (as noted by Bob Warfield here), my sense is that pure-play SaaS vendors will “collapse” more because they are flaunting customer [...]

  3. [...] – and Larry [Ellison] – should be listening to. Vinnie knows Harry’s history better than most. Bob Warfield agrees with Vinnie, noting: Well what do the analysts think?  Looks like they’re predicting annual growth of 30% [...]

  4. [...] Recent Comments Google Chrome: Where… on Google Anti-Gravity Ray is…Zoli Erdos on Which Came First: The SaaS Chi…Zoli Erdos on Which Came First: The SaaS Chi…Which Came First: Th… on Do You Read the SaaS Curmudgeo…Irregular Enterprise… on Headline: Lawson CEO Debes Pr… [...]

  5. [...] Bob Warfield makes the case that even if we ignore what customers want and only consider profitabilty, Debes is wrong, Salesforce.com is almost as profitable as Lawson, but grows much faster, while [...]

  6. [...] Warfield makes the case that even if we ignore what customers want and only consider profitabilty, Debes is wrong, Salesforce.com is almost as profitable as Lawson, but grows much faster, while [...]

  7. [...] Warfield makes the case that even if we ignore what customers want and only consider profitabilty, Debes is wrong, Salesforce.com is almost as profitable as Lawson, but grows much faster, while [...]

  8. [...] Mirchandani, Joshua Greenbaum, Bob Warfield [...]

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