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April 20, 2006

SaaS-sy

Posted by Benjamin J. Romano at 10:51 AM

There's no shortage of questions swirling around the software as a service (SaaS) business model.

That was in evidence at last night's WSA dinner/panel discussion on the topic. Moderator Timothy Chou, who wrote "The End of Software," called SaaS "a fundamental economic shift."

But one audience member asked how fundamental it can be until major Microsoft programs are delivered over the Web.

John deVadoss, director of architecture strategy at Microsoft, emphasized that it's not a choice between SaaS or the traditional ("old world," as Chou put it) perpetual license model. He's all about the "and," noting that the company's Live platform includes components of software and services.

SaaS doesn't succeed or fail on Excel being delivered exclusively through a service model, deVadoss said.

Chou, formerly president of Oracle on Demand, pointed out that several of today's high-flying Net companies -- Amazon.com, eBay, Google, WebEx Communications -- are operating on a SaaS model. Walk around Google's headquarters in Mountain View, Calif., he suggested, and all you'll find are programmers. "They're fundamentally a software company."

Another interesting tidbit: Nick Blozan senior veep of sales and marketing at OpSource, which acts as a contract manufacturer for delivering SaaS, asked who in the audience works for a company delivering SaaS now, or aspiring to do so. Nearly everyone put a hand up. Then he asked who is currently using SaaS, or wanted to. Far fewer raised a hand.

Steve Singh, chairman and CEO of Concur Technologies, which managed an "excruciating" transformation to the SaaS model and is now thriving, said SaaS will become a pervasive, long-term trend because it demands companies to be accountable to customers who have short-term contracts and can easily move from one vendor to another. It also has to be cheaper than any other option customers can choose, and highly focused, he said.

"It has to be like a utility switch. Nobody ever comes in and says thank God the electricity is working today," he said.

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