Cloud Computing and Project-based Businesses

Today finds us at the tail end of the launch of Intacct Project Accounting, Intacct's new cloud-based project management and project accounting applications, plus our new partnership with Clarizen, the hottest company in the project and work management space.

With 50 customers and partners in the beta and test programs, more than 30 press and analyst meetings and countless discussions with project-based channel partners it's been a very busy and successful summer.

Services is one of the largest and fasted growing sectors of the economy, fueled in part by aging baby boomers getting into the business. But at the same time, it is one of the most under-served segments from an application technology perspective. For many smaller firms, the state of the art is keeping track of projects, tasks and activities on paper or in spreadsheets and e-mail. For those larger businesses that have deployed traditional on-premises project management and time tracking software, satisfaction and adoption is generally quite low.

We think this is because the old on-premises software model just doesn't work that well for modern services companies. Services firms are more distributed than ever before, consultants are remote and in the field or working from home and everyone is always on the move. The old disconnected, batch oriented on-premises software model just doesn't match the way services businesses work today.

The downstream impact of the lack of effective project management and accounting systems is severe - without a real-time handle on service delivery, firms are flying blind. From lost billable time and expenses to slow cash collection and billing errors, to a lack of understanding of the profitability of projects, clients or contracts - the financial consequences are significant - to the tune of between 10 and 25 percent of revenue going uncaptured.

It's absolutely clear to me that cloud computing is compelling for the services sector. The idea of using the Internet to connect service delivery professionals, subcontractors, project managers and finance in real-time makes perfect sense. This would be an good idea at any time - but in the worst recession in 80 years it's that much more so - cash is king in services businesses and leaking cash is a bigger issue now than ever before.

With a cloud-computing based project accounting system, consultants in the field can quickly and easily enter their billable and non-billable time, expenses, and update project milestones anytime and from anywhere over the Web. Instead of an error-prone weekly manual process this becomes a quick and easy daily or even more frequent on-line process. Project managers and finance get instant visibility into the most current state of every project and every customer. Expense leakage is stopped, customers are billed faster and more accurately, and cash collection improves.

Transparency also improves - clients can access the system to view project and financial status in real-time over the web. We think this will greatly improve service delivery quality and increase client satisfaction.

The cloud makes it possible for firms of all sizes to leverage technology to solve these problems quickly and cost effectively. That's the real revolution here - leveraging the Internet to bring these capabilities to services firms of all sizes at very low cost.

I don't see all this as rocket science - I think it is a natural progression when you think about intelligently applying the core characteristics of cloud computing - secure, anywhere, anytime access to the system; centralized, real-time information delivery; implicit collaboration and transparency; and very low cost of ownership - to a particular vertical industry. When this matches the way an industry works - as it clearly does with the services sector - there is a huge opportunity for increased productivity and efficiency.

So what does it mean in real numbers? Our clients are telling us about an immediate 10% increase in revenue by stopping the leakage of billable time and expense and accelerating cash flow. They are also seeing solid decreases in non-billable time through the elimination of manual processes and other unnecessary overhead. I expect they will also be able to quantify major improvements in cash position and big gains from understanding project and customer profitability, which enables better business decisions.

So there you have it - the potential for cloud computing to deliver tremendous value to one of the largest sectors of the US economy. That's what Intacct Project Accounting is all about - from the initial results it looks like we are really on to something.

Harry Debes, Lawson CEO, STILL hates SaaS

We're rapidly coming up on D-Day when it comes to one of the more bone-headed comments in the recent history of the applications software industry.

Two years ago this month, in August 2008, Harry Debes, CEO of Lawson Software, told ZDNet that he foresaw the SaaS market "collapsing" in two years because the SaaS model is not able to deliver sufficient profitability for software publishers.

This was great fodder for the blogging community - I wrote about it here, the net of what I wrote was that Debes' position was amazingly customer unfriendly - "Lawson isn't going to do SaaS because it provides less customer lock-in and it is economically worse for Lawson that their current on-premises software model."

Debes repeated his prediction a year later in August 2009 - telling ZDNet "I haven't changed my mind on SaaS." By this time Lawson was getting interested in "cloud computing" but not modern, multi-tenant, operated by someone else, pay as you go for what you use, elastic cloud computing - Debes simply meant the same old single tenant Lawson product running on hosted servers.

August 2010 marks the two year anniversary of Debes prediction that SaaS would collapse within two years. And interestingly enough, it coincides with the end of Lawson's Fiscal 2010, in which Lawson saw annual sales down 3%, even counting the acquisition of healthvision (in other words Lawson's heritage license sales shrank even more that this), annual income down 8%, and fourth quarter income down by 70%.

In the same time period, the average large SaaS company grew by between 15 and 25%. Intacct grew even faster. So not only has the SaaS market not collapsed, SaaS vendors continue to grow more rapidly and take share from on premises vendors. Why - because SaaS is better for customers - better functionality, better service and a much better value.

I think it's safe to say that Harry Debes STILL hates SaaS, probably even more today than he did two years ago. Certainly Lawson's shareholders would agree.