Traditional trade and risk management software vendors in the commodity and energy trading sectors are taking a battering from a perfect storm of dwindling sales, customer abandonment and better, lower cost solutions. That’s the view from cloud vendor Aspect as it continues to take large enterprise business away from the industry heavyweights that once called the market their own.
Aspect’s claim follows a series of missed revenue targets, profit warnings, workforce layoffs, downsized development teams, senior management reshuffles and resignations among the industry’s big players. At the same time their customers are reporting poor support, failures to fix bugs, promised software updates cancelled and new features not being delivered. In some cases vendors are charging all over again for new products when agreed fixes and upgrades to existing solutions have been shelved.
Mature tier one customers are taking this as an opportunity to switch vendors to the new generation of cloud solution providers like Aspect. The firm reports a growing volume of large enterprise business coming from replacement sales. In 2013 there was one such example. In 2014 there were three. In 2015 the figure had grown to four. To date in 2016 the numbers have doubled with more expected by the end of the year.
Aspect CEO Steve Hughes predicted this hemorhaging of customers would continue to grow as the longer term benefits of cloud over legacy client-server became still more apparent: “At the moment we’re seeing companies moving to cloud as a fast, safe and cost contained way of escaping dead-end systems that vendors either can’t or won’t develop any further,” he said. “But as they get to appreciate the broader advantages of cloud solutions and the ease with which they fit smoothly into the business there’s no turning back. It’s cloud all the way.”
Customers’ experience certainly bears out Hughes’ contention. In his latest report to investors he cited a typically eight-week time to implement and users reporting dramatic cost savings, one saying Aspect’s total cost of ownership was comparable to the cost of support only for their previous legacy solution.
“Cloud is not just a like for like replacement,” added Hughes. “It delivers more functionality, more speed and a continuing evolutionary development path that sees upgrades and new features being added all the time.”