I’ve been looking over the data surrounding the closing of business for platform-as-a-service (PaaS) provider Coghead, and its subsequent selling of assets to SAP.
In a lot of ways, both sides of this event come as little surprise. Here’s why:
While the cloud concept is going to open a lot of opportunities in general, it is a bit too early to be banking everything on a cloud platform model. In addition, a lot of businesses already have their applications up and running on a traditional platform, and it will take a lot of time for companies to a) accept a PaaS model and b) make wholesale migrations to the model. Another thing that I think made Coghead a less than sure bet was that while it had a strong PaaS message, it had very little to offer in terms of feature or guidance to the line of business manager – the person running programs like CRM and ERP initiatives.
This is where SAP comes in. See, if a PaaS concept is attached to an existing application offering, or at least well connected to some form of functionality framework, making the move to a PaaS model is easier and less risky. What I mean is, it is tough to sell a new model of a development platform, with no new-fangled applications to go along with it. I think SAP can marry its SaaS and other next-generation applications to the Coghead framework and re-invent its applications strategy. If SAP can sell fast, easy development of its e-commerce and ERP/CRM tools, this could do well to change the image many hold of SAP from that of a highly functional, yet rigid application stack. Also, it could help them bring their ERP to the SME space more successfully with a message of greater flexibility and lower operating costs. (Trust me, this is a message that works.)
In the end, the timing could not have been worse for a firm like Coghead. In tough economic climates, many IT managers are going to be hesitant to bet on a nascent platform. I think time will prove that PaaS and cloud models will succeed, but for now having a strong application set that lies on top of an open, flexible platform is the safer approach in this market.