Online software 'more expensive and riskier'

Some of the biggest accounting software suppliers have been drawn into an argument over the reliability of web-based software.

In an interview with Information Week magazine last week, Bill McDermott, president and chief executive officer of global field operations at enterprise software supplier SAP, was reported as saying that software as a service (SaaS), which has been widely tipped as the future of business software, was ‘harder, more expensive and riskier’ than initially anticipated.

Under SaaS, the software is hosted by the supplier on the internet rather than stored on a corporate server or end user’s computer.

Charges for SaaS can be on a pay-per-use or monthly basis, making it more flexible than traditional software licences, which can tie companies to long contracts.

McDermott said that frustration over the reliability of SaaS for larger companies could lead to a backlash from business customers as ‘disillusionment sets in’.

He also said that internet-based technology was still in its infancy.

However, SAP rivals disagreed, arguing that SaaS could be just as reliable as traditional software.

David Turner, marketing director for financial software supplier Coda, said: ‘Clearly SAP is threatened by the SaaS movement. They make the mistake of assuming that because early applications have been relatively trivial or functionally shallow that SaaS applications will never be enterprise-strength.’

Chris Morgan, managing director of archiving software company Instant Intelligence, said: ‘Buying into the concept of SaaS should not mean making compromises in terms of the solution you implement.

‘Just because a solution is delivered online, it shouldn’t be restrictive in terms of its functionality in comparison to an on-site [traditional software] solution.’

Meanwhile, a court date of February 2010 has been set for the long-running legal dispute between SAP and Oracle over copyright.

The dispute dates back to 2007 when Oracle accused SAP of using a software business it had bought from Oracle, TomorrowNow, to commit what it alleges is ‘corporate theft on the grandest scale’.

SAP has admitted some of the charges but denies allegations that it intentionally infringed Oracle’s intellectual property and gained a competitive advantage.