Software: Are You Being Served?

Feathers flew at the Computer History Museum in San Jose last week, when the CEOs of SAP and Salesforce.com met to debate the future of software. At issue: Is traditional on-premise enterprise software -- such as that offered by SAP -- obsolete in the era of network-delivered software as a service (SaaS)?

Marc Benioff says it is -- but then, he would. Benioff's company, Salesforce.com, is perhaps the most prominent example of the new generation of SaaS vendors. But a growing number of small business owners are beginning to realize that he has a pretty good point.

As with other SaaS applications, you don't install Salesforce.com at your location. Instead, the applications run on Salesforce.com's own servers, and users connect over the Net using a Web browser. That means your IT department has less control over the applications; but on the flipside, care and maintenance of the servers and software are handled exclusively by Salesforce.com. That frees up your technical employees to deal with problems that are relevant to your business, instead of wasting time babysitting someone else's software.

The result for your bottom line is that you buy software just like you would your electricity, your Internet connection, or rent on your office space. You pay a monthly fee and it's there for you. Plus, you get all the bug fixes, maintenance, and version upgrades automatically.

During the debate, SAP CEO Hasso Plattner said Salesforce.com's platform isn't nearly sophisticated enough to connect to the rest of the software in a large enterprise, and he may be right. SAP, he pointed out, has some 2,100 interfaces that bridge SAP applications with other kinds of software.

Still, for small to midsized businesses SaaS is compelling, and recent Forrester research suggests that interest is growing among large companies. Meanwhile, vendors are racing to bring versions of existing software categories online, from office suites to graphic manipulation software. It's far too early to imply that all business software will go this way. But is it too much to suggest that all businesses can expect to use some form of SaaS in the near future?