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What is the future of software as a service

I’m not at the conference this week (we do have several people from our shop there), but to answer a question posed by Frank Gilbane:

What is the future of software as a service, and is it appropriate for enterprise content applications like content management, authoring, etc.?

The SaaS model seems to have been proven to the point where it’s hard to imagine that it won’t keep growing. We recently posted a whitepaper on SaaS myths, which debunks most of the common arguments against SaaS. In addition to that discussion, I’d offer the following four points:

1) SaaS is a proven technology. It arguably extends to the early days of the web with software ASPs. I guess you could even argue the lineage goes all the way back to mainframe apps! 🙂 Certainly, though, the existing SaaS companies have been working successfully with this business model for more than six years now.

2) Web technologies have reached a point where SaaS is an out of the box solution. You can now count on fast network connections for users both in the office and home. Security systems are complete from SSL with web browsers up through terminal services like Citrix which allow even HIPAA compliance. For web apps, browser technologies like IFRAMES and AJAX allow apps to be easily integrated on a page (mashups).

3) SaaS provides much more robust server management and security, especially for small and medium sized businesses. As web applications grow more complex, SaaS allows much more convenient, rigorous and cost-effective control over hosting. By centralizing and focusing, the best resources can be brought to bear on fewer hosting environments.

4) This one is a bit of a prediction, and is specific to web sites. Currently, you have a couple options when adding components like blogs, rss, ecommerce, polls, surveys, and search to web sites. You can install apps for those services, which allows you to control ad placement and design. The alternative is to use free hosted apps where the ad revenue goes to the SaaS company. So, the logical next step is for high quality hosted apps where the ad revenue is shared with the web site. This is already appearing with sites like MetaCafe. For an advanced CMS, though, I am not sure this will happen since the CMS tends to be the hub for all the other web apps, but it is certainly possible for a basic CMS.

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