SaaS - All Hype and No Play?

One of my friends after reading my blog asked me to outline some of the primary benefits of SaaS. While some of the the benefits may resonate more than others with the readers, to me the primary benefits of SaaS t(real and Perceived) to the end user include:

• Lower Operational Cost: due to scale advantage that provider is able to leverage and distribute across multiple customers
• Lower Cost of Customization & Software Maintenance
• Faster Initial Deployment & Upgrades
• Up-to-date Features provided by Specialist (do not have to wait for patch)
• Access to Industry-wide Best Practices (software user does not have to hire in-house industry expert)
• Strategic Benefits: Ability to Focus on Company’s Core Competencies (as opposed to IT)
• Balance Sheet Management; Fixed to Variable Cost Conversion

If some of the readers have additional benefits that they can list, please comment on it. Also, i would love to hear more about how different vendors are innovating with SaaS to provide new applications to the end-user, so send me your favorites or nominees.

To SaaS or not to SaaS - That is NOT the question (anymore)

Increasingly it seems that SaaS (Software as a Service) is becoming mainstream. Recently, i had the opportunity to hear Phil Wainewright on our campus, Phil said that 2008 was the year of SaaS. Phil articulated the confluence of business and technological reasons that are coming to a head to make 2008 the year of SaaS. Like other Silicon Valley folks, i have seen SaaS evolve from ASP to its current incarnation. I have even had the opportunity to work with Oracle's first foray into ASP (labeled BusinssOnline at the time), and at startups where we tried to reach the mid-market with back-end ASP apps (like PeopleSoft). The combination of hearing Phil speak, and my added new responsibility (working with SaaS partners, and heading the SaaS program office at my employer), made me think if folks still grapple with the question to SaaS or not to SaaS.

What are the reasons that make the question - To SaaS or not to SaaS irrelevant? The answer is that outsourcing (people and services) is becoming a more common and established business practice. Companies are forced into focusing on their core competencies in trying to maximize revenues for themselves. As a customer, enterprises are looking to do more with their existing limited budgets, realizing that they either cannot keep up with the technological sophistication required to maintain software on premise, nor want to deal with questions around Security, capital spending, or wait until the the consultants have finished integrating the various pieces of software, before reaping the promise of the technology.

Vendors are also finding that they are missing out on a big revenue stream by not offering a SaaS version to their customers. Software vendors are finding that with the advances in SOA and security, integrating their software with other applications is becoming easier and are now able to offer a compelling integrated solution to their customers, able to monetize their offerings much more quickly, increase the barrier to exit for their customers, and have a predictable revenue stream coming in. What's not to like?

I hope 2008 is the year of SaaS as Phil says, however its clear that customers and vendors are not asking whether to SaaS or not, but rather "how to".