Lawson announced plans to run its Enterprise and Talent Management software on the Amazon cloud. It also announced a subscription model around its license and maintenance cost.
First things first – this is a giant step forward for a vendor whose CEO was predicting the SaaS market would be collapsing about now.
But as I told my former Gartner colleague, Jeff Comport who is now SVP of Product Management at Lawson, this basically acknowledges ERP compute and storage cost is overpriced. It does not tackle Lawson’s license, annual maintenance cost, the cost of application (and database and other components) management, upgrade and other common ERP costs. And while Amazon costs can be elastic (depending on how Lawson will pass them through), the cost of amortizing the Lawson license, the annual Lawson maintenance, AM staff (or outsourcing arrangements) and upgrades have remained stubbornly fixed over the years.
To which Jeff’s response was those costs are not ready to be commoditized. Most of Lawson’s customers are not ready to move to the scale of shared services SaaS vendors are leveraging.
My first research paper at Gartner in 1995, where I reported to Jeff was on costs metrics surrounding various accounting, HR and other back office transactions. 15 years later we have not seen much of an improvement in those metrics. In this economy and given competing innovation projects, there is a screaming need for the cost of ERP transactions to be dramatically commoditized.
Today, using the phrase from Dr. Thomas Harris’ classic, Lawson is telling its hosting partners “I’m ok, you are not ok compared to Amazon”. Sorry, Lawson you need to dramatically rethink the application costs as well, not just that of the infrastructure.
Kudos on making the move. Just don’t stop here.
