The notion of DaaS is very compelling, because it allows other applications to be built using existing pieces of functionality (data in this case), which in turn can be offered as services (SaaS), which can then again be used by other applications, and the cycle goes on. This aggregation is what is going to provide real value for enterprises, since no one will want to manage 20 SaaS applications within their department/company, and a mashup of those into one portal will be useful and very powerful. Consider the applications I listed in my previous post for running a company entirely via SaaS apps; it will be extremely useful for such a company to worry about one application, one interface, one billing cycle.. you get the idea. Dream as of now, but it is the way to go.

However, one of the major obstacle for such a dream is the fact that today’s SaaS applications are full-fledged applications and not a service in true sense of the word. For example, learn.com offers learning management and course registration and tracking, but it is unlikely that they provide these services devoid of their user interface (howmuch configurable it is). And, in the race of SaaSifying applications, it is entirely possible that new-SaaS companies may not be thinking about this aspect, and thus when the move to such mashup of apps happen, they will scamper again to provide their capabilities as full-fledged service and not only service-wrapped-in-UI. Something for new companies to watch out for!

Interestingly, while I was writing this post, I found  Phil Wainewright has already talked about this in the context of Web 3.0 (already we are talking of 3.0!). And I thought I was being original!

However, if you think about it, even though the thought is enticing (esp for companies who already have premised solution and want to quickly move to SaaS model), it is easier said than done. Most of the problems in SaaS world lie in creating an application which is order of magnitudes more scalable than any premised solution. Even though the problem seems to be something amenable to tuning of application-agnostic pieces (like DB, operating system, new hardware), real scale can come from an application designed to scale that way. Same goes for economy of scale, which is another important part of a successful SaaS deployment. This economy needs to be built into the application when scale grows rapidly.

However, there are indeed areas where SaaS deployment do get helped by such platforms. One such area is partner eco-system for services that all applications (or all applications of a class) need. For example, most applications will need payment and billing services, so will they need application monitoring services, customer tracking systems, helpdesk, managing trial sites, business intelligence and reporting, etc. As platforms mature and start creating such ecosystems and parternships, they will start becoming valuable. Till then, let’s wait and watch!

SaaS mantra is very compelling for small and mid-size businesses (SMBs) who do not want to invest a lot when they want a software service. SaaS enables a company to manage all the aspects of running a company:

• HR(http://www.kronos.com/Support/Subscription.htm)
• Finance (http://us.intacct.com/)
• Sales (http://www.salesforce.com)
• CRM (http://www.kana.com/services.php?tid=4),
• Learning and performance management(http://www.learn.com, http://www.successfactors.com)

And all this at ‘low monthly fees’ as these companies like to claim! But it is very impressive: no hassles of buying/leasing equipments, or even office space in many cases and you can run your company on a monthly basis. 

Interesting twist is that this holds true for enterprises these days too, because of the fact that most big enterprises work like conglomerate of multiple SMBs within them (divisions, BU, OU, etc) who would like such a flexibility rather than expensive upfront investment in premised software that requires approvals from IT, COO, and all other people who may not have a stake in quick availability of the service desired. This opens up large market for SaaS providers, and also provides them a way to tune their existing premised solution to SaaS offering since they get ready buyers who are used to their products.   

Given the fact that SaaS is new, it is exhibiting similar phenomenon to any other startup streams: there is a proliferation of me-too in all the services area, there are tons of industry pundits out there telling us how to build a SaaS offering, and recently I have started noticing ‘SaaS platforms’ that enable rapid SaaS solution creation and deployment. All this means that there are lots of opportunities if someone is looking for new business ideas.

If you want to keep track of SaaS developments, here are some good places to go to:

• Zdnet runs a good blog site, from business perspective: http://blogs.zdnet.com/SAAS/ 
• For techies, Microsoft’s SaaS director has his blog: http://blogs.msdn.com/gianpaolo/default.aspx.
• Here are StumbleUpon for SaaS site recommendations: http://www.stumbleupon.com/tag/saas/

Also, do keep reading my posts, I plan to continue following-up on SaaS developments and provide my insights and comments. Let me know if you would like me to comment on some specific aspects (I am thinking of ‘SaaS platforms’ in my next post).