Oracle expands SaaS offerings at a high price

Back in November, I posted a blog on Larry Ellison's down-beat assessment of Software-as-a-Service models. Just five short months later, Oracle is set to launch a subscription-based procurement program application called Oracle Sourcing On Demand. It has a fairly high price-tag -- $850 (US) per user per month (PUPM) -- especially compared to their SaaS CRM product which clocks in around $100(US) PUPM.

Oracle claims that Sourcing on Demand will integrate seamlessly with their on-premise ERP systems, as well as with others. Of course, they all say that. And of course, such a claim relies on a loose definition of "seamless." Nevertheless, it's an important concession by a company that, like SAP, has self-servingly downplayed the efficacy of SaaS solutions. They realize that their long-term survival will depend on making their products easy to buy. In today's market, the best way to do that is to reduce or eliminate the up-front capital outlays normally associated with such solutions.

Still, a single annual subscription for Oracle's new product tops $10K, and a firm with five users is looking at $50K before they even start to integrate the product into their business. It appears to me that Oracle is pricing themselves out of the market.

Oracle, Inc.: ORCL (NASDAQ)
Related newstory: Oracle Offers Procurement SaaS