It's Monday but I'm sure the biggest news this week is likely to be Microsoft's abandonment of its bid to buy Yahoo, a move widely believed to have been an attempt by Microsoft to enter new Web and Enterprise 2.0 markets and solidify its standing in the field.

In a letter to Yahoo CEO Jerry Yang, Microsoft CEO Steve Ballmer cited Yahoo's decision to outsource search terms to Google and the ramifications the plan could have for Yahoo's business, suggesting that Yang was taking specific actions to make Yahoo as undesirable to Microsoft as possible. If so, Yang apparently succeeded.

People around the Web have had mixed reactions. Many believed that a Microsoft/Yahoo combination would have made good business sense, while others had been skeptical of the deal. ZDNet's Mary Jo Foley has a poll on what Microsoft should do next. Should it acquire another company? Wait for Yahoo's shares to tank and then buy it anyway? She also points out that some are calling for Ballmer's resignation after the failure of the deal and has a poll on who would replace him should that be the case.

If Microsoft decided to buy a different company, Computerworld has an article speculating on three companies it could buy instead of Yahoo: AOL, LinkedIn, and ValueClick and lists the rationale behind each potential purchase.

Apparently, Yahoo's shares also fell 21 percent after the announcement that the deal had fallen through.

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When companies are developing SaaS applications, billing is a very important consideration but sometimes ends up as an afterthought, says Ed Sullivan, CEO of Aria Systems. Ed joined me for a talk about things to keep in mind on the billing front; listen to the podcast below or read the transcript.

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KD: When a company wants to develop an deploy a software as a service application, one of the many considerations they must think of is billing and according to Ed Sullivan, CEO of Aria Systems, a lot of companies make critical mistakes in billing. Ed is here today to talk to us about software as a service billing and how best to handle it. Thanks for joining us today, Ed. Can you start by telling us how most providers are handling billing right now and what’s wrong with that approach?

ES: Based on what we’re seeing in both our existing customers that have come to us and prospects that we’re talking to, is that they tend to treat billing as an afterthought and cobble together maybe a PayPal account with Quicken or merchant account and don’t really, those solutions don’t really scale for one, secondly they’re not compliant with some of the, you know, the credit card industry stuff, taking personal information and thirdly, they don’t scale, they might scale, you know to a couple hundred or a couple thousand customers and you can do things manually but by treating it as kind of this cobbled-together thing, the thing they don’t automate all of the use cases throughout the customer life-cycle.

KD: All right, that makes sense. So what would you say is a better way to handle billing for SAS applications?

ES: Well, I think one of the other issues that some companies have when they’re billing a SAS application, either from an on-premise application that you’re trying to convert to SAS or a new service is that they’re still thinking in the old software paradigm where it’s kind of a one-time purchase, you either take the credit card or you prove the transaction through a CFO and a PO and then you move on. In software as a service, you’re software is not your business, but your customer experience is your business and all of the use cases throughout the customer life cycle need to be considered when building a SAS application. For instance, when somebody signs up, tracking channels and tracking resellers, integrating with something like Salesforce.com to bring the customers into the service, being able to do more than just take a one-time transaction but manage multiple transactions throughout a customer life-cycle that might extend beyond a one-time purchase, monthly, quarterly, annually for an extended period of time. So, taking the approach of understanding what all of those use cases are in a long subscription based or recurring relationship.

KD: OK, so for companies interested in putting together a SAS offering, such as ISB’s can you give a list of do’s and don’t’s that they should keep in mind when considering the billing issue?

ES: Yes, so we’re kind of seeing a convergence of really two forces, if you will. One of them is the way consumers are buying goods and services on the internet and products on the internet – songs, videos, etc. is leaking into the enterprise so what I mean, even CIOs of large companies are not willing to bear the expense of building out an entire infrastructure and go after compliance, etc. when the number of users they have is not determined yet. So, I would say, the other thing that is happening is the world – I read the book, The World is Flat but it really is, I didn’t appreciate how amazing that phenomenon is until it started happening to us here at Aria and our clients. We built our software to really for North American companies and we kind of were faced with this happy accident of having customers and end-users, in turn, in 236 countries, 16 different currencies, having to deal with not just the rigors of being able to take credit cards and manage personal information in the United States, but understanding things like the European Safe Harbor Act when a software company in the middle of America decides to sell their software over the web and somebody from Europe shows up with a Visa card and if you take that personal information and unbeknownst to that service provider they’re in violation of a treaty between the United States and the European Union when they take the citizen of the EU’s personal and financial information across a border.

There’s a whole bunch of compliance issues out there that small companies tend not to think about and even larger companies are starting a new service don’t think about that really need to be considered if you’re aiming to have a large successful business.

KD: Anything else you’d like to add on the subject of billing and SaaS software?

ES: I guess the three main things I like to talk about are that your software is not your business, making sure that you understand that unlike classical software providers your software is not your business and you’re entering into a relationship as a SaaS provider. There are different use cases throughout that life cycle. You need to consider billing before you enter into beta for your software so that you can have a really good understanding of how you can get all those interactions to scale in business. So we say billing before beta and billing is really treated as an afterthought and it should be well thought out and planned while you’re building out the application, especially for SaaS providers.

KD: Great! We’ve been talking with Ed Sullivan of Aria Systems about software as a service billing concerns. Remember if you want more blogs, white papers, news and more about software as a service and enterprise 2.0, visit www.ebizq.net. Thanks for listening and have a great day!

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Once thought to be the realm of SMBs, SaaS is increasingly becoming more prevalent in the enterprise. CIO Australia has a good article about this today that profiles the rise of SaaS in larger companies.

The article quotes Capgemini's head of SaaS pointing out that SaaS means faster time to market and a more business centric cost model that allows for closer aligning of IT costs to business impact.

A representative from a SaaS CRM firm suggests also that some companies deploy a SaaS solution as an interim solution for a problem and then ultimately end up keeping the SaaS solution after being pleased with the value.

Other points include that what is outsourced in SaaS is merely "grunt work that should have been done by the vendor" and that the CIOs are more and more frequently becoming involved in decisions to deploy SaaS.

The article makes other interesting points as well. I have often wondered why SaaS is so frequently labeled as an SMB issue, and I do suspect that more and more we will hear of larger companies choosing SaaS and that enterprise class SaaS solutions will become more prevalent.

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The news of the day is Microsoft's launch of its Live Mesh synchronization offering, a key part of its Software Plus Services initiative. The IT media is abuzz with stories about Live Mesh and what it brings to the field. Here's a roundup of a few good stories:

• Ina Fried of Beyond Binary attempts to simplify everything by offering an FAQ that answers basic questions about Live Mesh, such as what it is, how it works, and what it can do.

• Computerworld reports that analysts are saying Live Mesh is Microsoft's attempt to shift the playing field back to its strengths. The article quotes one analyst as saying the announcement is a step backward, rather than forward, pointing out that Microsoft seems to be trying to move Web 2.0 to its proprietary Windows offering.

• SeekingAlpha has Microsoft playing "catch up," according to a post by Jeff Kaplan, a noted SaaS analyst. Kaplan compares Microsoft's efforts to those of SaaS leader Salesforce.com, noting that Microsoft seems to be trying to redefine the trends to fit its own terms.

• In the Dave's Download blog on US News and World Report, blogger Dave notes the confusion in how Microsoft is presenting the offering and that it's apparently aimed at consumers.

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Intelligent Enterprise has posted a review of Microsoft's SQL Server Data Services. Rajan Chandras calls the offering a late but promising entry into the field for the mid-market, predicting that the offering might help businesses attempting to enter cloud computing and Web 2.0 markets.

Database as a Service, or DBaaS to use the tired acronym system, is not identical to DaaS or "Data as a Service" or "Infrastructure as a Service." DBaaS is just one part of data services, says Chandras.

Chandras goes on to conclude that the notion of DBaaS is certainly a step forward for Web 2.0.

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An article by Glenn Derene at Popular Mechanics questions whether social networking sites might ultimately "kill" search. In the article, Derene refers to a venture capitalist who has predicted that Web 2.0 will ultimately be the main way that people use the Web and the things that people search for will be handled through social networking sites instead.

The article inspired a lot of commentary, both in agreement and ridiculing the concept that social networking sites could serve these functions. I found a lot of the comments interesting -- some referring loosely to ideas that have been tossed around in discussions of "semantic web," like searches that can figure out your intent based on your personal info rather than merely by the words you type into the search box.

Other commenters point out that people don't use search sites and social networking sites for the same purpose, and that people would not be likely to turn to a social network for the type of information that the usually use Google for.

Definitely an interesting discussion. What do you think? Post any comments here.

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Matthew Broersma at TechWorld has written an interesting article about potential security vulnerabilities in Google Apps, particularly in Google Spreadsheets.

According to work done by researcher Billy Rios, a security flaw (now fixed) was present in Google Spreadsheets that left users vulnerable to session stealing. Broersma reports that Rios believes this is a reminder that developers need to be aware of cross platform issues and how browsers may handle script and other code in different ways.

Is this a concern for other SaaS applications? Time will tell.

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