The Summer of SAAS

The battle in the clouds. No, this isnt the next sci-fi movie where the Transformers take on the X-Men. Come to think of it, it isnt all that far off from that. For a number of reasons, this summer will be remembered in the high-tech industry as the season when software as a service moved to the forefront.

Business software—in particular, business software for large organizations—tends to move slowly. The thrill of being an early adopter is often at odds with return-on-investment calculations, security considerations and legacy application integration.

At some point, however, those obstacles are overcome, and the buildup of potential projects becomes an industrywide spending trend. If you can build an application more quickly, less expensively, more securely and more precisely attuned to your companys business goals, its tough to continue to say no. That, Id argue, is where the industry is now with SAAS.

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Microsoft has recognized this trend for a while, but has been of at least two minds on how to address the idea of e-mail, CRM or storage that sits up there in the cloud rather than exists as a hard, measurable revenue driver sold in a box to sit on a company server.

At Microsofts recently concluded Partner Conference, the company finally started to get more specific. "For software plus services, the time is now," CEO Steve Ballmer told the partner companies in attendance.

Click here to read more about Microsofts "software plus services" vision.

Actually, Steve, the time was a couple of years ago. However, Microsoft has shown time and again that persistence (and a revenue stream funded by a desktop monopoly) can overcome tardiness.

But beyond Microsofts delayed revelation, the evidence of this being the summer of SAAS is compelling. For example, by buying communications management and compliance vendor Postini, Google filled a key gap in its business offerings.

Overshadowed by other recent news but of more long-term importance was SISA (Secure Information Sharing Architecture), an alliance announced by Cisco, EMC and Microsoft. One continuing stumbling block to service architectures has been not so much a lack of potential standards but way too many architectures claiming to be the standard. An offering such as SISA will drive the standards process forward.

Probably the largest driver to speed service adoption is the business imperative. If a competitor can provide a product or service that you cant and you start losing business, its amazing how fast your new project can get funded.

In the real estate industry, for example, Zillow.com provided an early mashup application of home-price estimates overlaid on Google maps. Now Zillow is adding social network applications. Thats a feature that traditional real estate companies dont provide and is a prime example of how a service can give a business a competitive advantage.

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