I remember an old Dilbert comic strip in which Dogbert was using his newfound wealth to become a venture capitalist. Of course, his prospect's great idea turned out to be developing a new word processor for Windows, so Dogbert used his money to get the waiter to bludgeon the guy with a stale loaf of bread instead.

That image flashes in my mind every time someone decides to take on MS Office head-on, whether the challenger is called Google, Sun, IBM or whatever. Simply put, it's a tough nut to crack. Having said that, it's not a hopeless fight just because Microsoft happens to be dominant, nor would I shed tears on the Redmond giant's behalf if they indeed DID get dethroned.

One interesting new angle is that of Office Project, which so far has remained largely unchallenged. Well, no more. On-demand vendor and open source player Projity is setting its sights on Microsoft with the a "complete replacement" of MS Office Project. Ambitious? Yes. Odds of success? Slim, but far from DOA.

Projity has done a better job bringing its product to market than competitors such as Project.Net, another open source vendor, says enterprise software analyst Dennis Callaghan of the 451 Group. Time will tell if Projity's luck holds, but it's definitely an initiative to keep an eye on in the year ahead.

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SaaS blogger Bob Warfield made a bold statement the other day. In an interview with Concur CEO Steve Singh, he suggested that conventional software is inherently built on bubbles, whereas a SaaS model would have moved forward quicker without the ebbs and flows that plague old school ISVs.

Not surprisingly, that raised a few eyebrows. ZDNet's Steve Wainewright was taken aback by the statement, pointing out that the implication for conventional software then becomes akin to that of subprime loans -- great idea during boom times, but somewhat less awesome when the music stops. But then again, he conceded, there were some strong arguments in favor of this view.

Indeed, there's a common sense aspect of SaaS that tends to hold true during boom and bust alike: Flexibility is very, very nice. Buying a seven-figure solution that is two sizes too large and hoping you eventually grow into it is a risky move any day of the week.

Furthermore, it's money up-front, not just for the license but whatever implementation hassles your consultants plan to wring out of you. There's a reason Larry Ellison doesn't like the low-profit SaaS business, and that in and by itself is a good sign as far a cost-conscious small and midsize businesses should be concerned.

Having said that, is SaaS an inherently stronger model that is destined for eternal greatness by inherent design? Nope. There's a reason SAP has an iron grip on the S&P 500 crowd, and that isn't just because of size although that certainly is a factor (anyone want to run GE's global payroll using SaaS?)

The nature of the business plays in as well. A midsize firm specializing in the latest personal electronics gadgets that chase fickle customer tastes need maximum flexibility. They drop the ball once in a while, but next year they may have the next Must Have holiday item. These guys need to be able to turn on a dime, whereas a manufacturer of canned corn can be fairly certain their business won't fluctuate much in terms of workforce, product innovation, economic cycles and so forth. Why would they spring for a SaaS solution when they can call a local ERP vendor, eat the initial cost but then run on the same system for 15-20 years with bare-minimum, in-house maintenance?

The point I'm trying to make is that it's easy to get caught up in the high-speed pacing of the tech sector and have that become the norm, while the majority of real-life companies that actually use the stuff just don't move that fast nor have any desire to do so. Of course, a big percentage of them are likely to benefit from a full or partial SaaS approach nonetheless, but in order to get there they need to be convinced -- which is a completely different discussion.

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IDC has released a study on the emerging SaaS channel in which it concludes that Software-as-a-Service may have a serious impact on traditional partner revenue streams.

In the press release, senior analyst Erin TenWolde said, "Two big wrinkles for partners are obviously the subscription revenue stream associated with SaaS solutions as well as selling 'virtual' products where there is nothing to physically ship, implement, or keep on the shelf. This is going to drastically change the way partners and SaaS providers engage with one another in the future."

Darren Bibby, also a senior analyst, predicted a shift of technology-centric solution providers to business process consultants and the emergency of new partner types.

The study also concluded that nascent partnering models still exist in the SaaS ecosystem but that activity is occurring on a trial and error basis, that VARs face potentially large challenges in securing revenue in resale scenarios, and that new solution providers will emerge to develop discrete expertise in niche areas.

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Since Yahoo! announced its intentions to buy Zimbra, a company that offers a messaging and collaboration suite via SaaS, PC World reports that Zimbra users are largely grumpy about the news. Citing a discussion thread on Zimbra's website about the acquisition, PC World reported "a collective feeling of alarm" that Yahoo! is not ready to serve enterprise consumers and fears that Yahoo! would ultimately kill off the product as a separate entity.

Zimbra co-founder and CEO claimed the fears were unwarranted and called the fears mere paranoia. Read more here.

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In InformationWeek's CIOs Uncensored blog, Mary Hayes Weier reported that Larry Ellison has no interest in the SaaS trend because "there's no money to be made there." Because SaaS is so much cheaper than on-premise software as a rule, Ellison wants no part of the lower consulting, integration, and licensing fees until someone figures out how to make more money out of it. Instead, Oracle wants to keep targeting larger companies with traditional software delivery. eWeek also had a longer article about Ellison's comments.

Is Ellison on the wrong track? He definitely has a point, insofar as SaaS does have a potential to cannibalize vendors' profits when customers choose it over more expensive on-premise software. But if Oracle's competitors, such as SAP with its new Business ByDesign offering, decide to offer SaaS, then Oracle may risk losing potential business by not jumping on the bandwagon and giving SaaS-wanting customers what they want.

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The ripples continue from Capgemini's decision to support Google Apps a few weeks back. Last Thursday, Rhys Blakely of UK-based Times Online issued an interesting report on the increasing competition to MS Office from IBM, Google, and Yahoo. The three companies appear to have full intentions of targeting MS Office's position as the market leader in office suites.

Blakely quotes Tom Austin of Gartner as saying, "This constitutes a real threat to Microsoftas business model. Eventually, it will have to switch from limited-use licenses to software as a service. That will require a fundamental re-engineering.a More here.

Eric Knorr of InfoWorld had a different take altogether. Musing on Microsoft's "eery" silence about its increasing competition from SaaS desktops, Knorr wondered if Redmond might have a secret project in the works that it will unveil in the near future.

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There's still some debate in the blogosphere about SAP's grand A1S-turned-Business ByDesign SaaS gamble. On one hand, the mere fact that SAP is seriously looking beyond the safety of the old, familiar cash cows in the upper end of the market using a SaaS model to chase smaller fish is ample evidence that the model isn't a passing fad.

As mentioned yesterday, the general feeling is that SAP BBD is a solid, well-rounded product that just might give Larry Ellison, Benioff and other players in this space a bit of headache. ZDNet's Phil Wainewright said SAP gets it. Zoli Erdos predicts world domination.

On the other hand, SAP's track record for the small and midsize market is considerably more lackluster than their S&P 500 customers.

Indeed, a few years ago SAP made a big deal about its commitment to reach a lofty 100,000 customers by 2010. Naturally, that means the bulk has to be made up of SMBs. It's nearing the end of 2007, and they're what, 60,000 customers shy of that goal?

Furthermore, let's not forget that SAP dipped its toe in the SaaS water last year with its decidedly ho-hum CRM On-Demand product. While technically not bad, I have yet to see even SAP people do backflips over how that turned out.

They're not entirely letting go of their old ways either. Note that they put a minimum cap if 25 users for BBD. Why? Could it be to prevent cannibalizing Business One?

That cannibalization issue should be taken seriously. Let's not forget that SaaS is a very disruptive model, completely different from what they usually work with. On a side note, the resulting churn, increased marketing costs and customer retention challenges that comes with the territory could have a major impact on SAP's bottom line to boot. A big SAP failure could become a heavy chill for the SaaS sector as a whole.

But let's not paint doom and gloom. Again, the product itself seems reasonably strong, weak UI and all, and the $400 million SAP plans to spend singing SaaS praises should make the next few years a very interesting time for SaaS vendors and customers alike.

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Today was the big day for ERP giant SAP, which has officially unveiled its new product Business ByDesign, formerly known as A1S. According to a report by Computerworld, SAP states it would invest $400 to $550 million by the end of 2008, and CEO Henning Kagermann called the unveiling of the product "the most important announcement I have made in my career."

Business ByDesign is to be priced starting at $149 per user per month, and the service is targeted at businesses with 100 to 500 employees, and it is expected to be widely available by late 2008. Computerworld has more.

From experts who visited the demonstration, reaction was generally optimistic. ZDNet's Phil Wainewright said that SAP appeared to be on the right course and to understand SaaS, but that risks still remained in terms of customization and cannibalization. Also of ZDNet, Michael Krigsman agreed with general consensus that SAP has a lot at stake and that the product represents a shift in SAP's thinking, but advised customers to hold off on purchasing until the system has more of a track record.

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Drawing from years of experience in the field, including time as a consultant and then time working with Salesforce.com, NetSuite, and Siebel, LucidEra CEO Ken Rudin has a lot to say about Software-as-a-Service and the latest developments in the business intelligence field -- including upcoming SaaS efforts by enterprise software giants Business Objects and SAP.

LucidEra offers SaaS-based reporting and analysis tools that can create dynamic, efficient reports that pull data from multiple areas of the business, eliminating the need cut and paste reports from different spreadsheets to bring the data together. Although many companies try to do this themselves, Rudin likens the effort to managing your own nuclear reactor in the basement when all you want is electricity rather than choosing to pay a utility company to manage the reactor for you. He states that by handling this business need through a SaaS approach that rather than paying a team of consultants hundreds of thousands of dollars for a six-month effort, companies could sign up at 9am and be up and running by noon -- clearly an improvement for many types of companies.

Rudin took some time from the Dreamforce conference to share some thoughts on current trends in the SaaS market and the efforts of the giants in the ERP industry to move to the SaaS world.

Concerning the upcoming SaaS offerings of companies like SAP and Business Objects, do you think these SaaS offerings be the panacea that those companies hope it will be as far as penetrating the mid-market?

You cannot do what every enterprise company ends up doing, which is taking their technology that's on premise and then putting it on their own servers with a web front-end then call it SaaS. In most cases, that original software is not designed to be delivered as an on-demand solution. Trying to move from on-premise to on-demand is not just an exercise in relocation of software. On-demand is much more than that. It's about making a solution that is easy to set up and easy to use. If you take Business Objects, for example, which is an incredibly complex piece of software, just physically moving it doesn't make it easier to set up and easier to use. Now you just have a solution over the web that's hard to set up and hard to use. So the on-demand model is not just about relocation of service; it's about a whole mindset that has simplicity and speed as core tenets and you don't get that by just moving the data and taking a traditional product and putting it online.

Every company probably has to do that I'd recommend that every enterprise do that as a first step. No, it doesn't work, but the companies often need to prove to themselves that it doesn't work. They have to go through this process of taking what they've got, hosting it, and then thinking much deeper about what they really need to do as a company. Truly it just doesn't work. It's like taking a car, putting a propeller on it and calling it an airplane.

How do these developments affect the internal environment of the company, and can you comment on whether companies like SAP and Business Objects run the risk of product cannibalization?

The harder issues are the kind of cultural/emotional issues within the company. Probably the most challenging is the fear of cannibalization. You've got these big companies that sell $500,000 licenses and then they start to worry when you talk about instead signing on customers that pay a half million upfront, you're going to sell contracts that charge $70 per user per month. They start saying, "we'll avoid that by taking our traditional enterprise product and we'll target that to large enterprises and so we won't see cannibalization there. What we'll sell to now for on-demand is the mid-market. Then we'll see increased and not cannibalized revenues to the mid-market."

The flaw is that although you may say the above, customers seem to stubbornly resist agreeing to your fairly arbitrary categorization there. You'll eventually get some large company looking at your on-demand product and saying can we use that one? Then you're back to the idea of there goes your million dollar deal to your $70 per user per month deal. Then you also have the issue with on-demand that A) you don't get cash upfront, and B) equally as troubling is if you're a public company, you want to realize revenue. With traditional software you can recognize everything upfront, but if you're selling a subscription-based model, you can only recognize revenue pro-rated over the life of product's contract. You may find your sales guys going, "there goes my commission," and end up creating a civil war inside the company.

Is there a risk that these products are really just a bait-and-switch with these companies having an ultimate goal of migrating customers to more expensive on-premise software packages once they're hooked into the SaaS products?

I've seen this happen again and again. You can't tell enterprise customers that they're not allowed to buy on-demand software. Then you end up having companies say "Why don't we do it this way? Let's sell them on-demand but it doesn't have the same level of features and functions. Then they'll get started wtih that, and then when they're ready to go for the real solution, we sell them the on-premise solution." That gets the customers on the road to lots of consulting dollars that they'll have to spend, lots of implementation and consulting fees. It really is bait and switch; they try to sell the easy thing, then as soon as possible, convert the customers to the traditional solution.

But it doesn't really work. I don't know that I've ever seen a customer start with on-demand then move to on-premise. Actually, there is an on-ramp between on-demand and on-premise, but unfortunately it goes the other way. Most start with on-premise then they like the value they're getting out of it but they prefer value without complexity, so they move from on-premise to getting it on-demand. I don't know any companies that have started on-demand and gone the other way.

For SAP and Business Objects, would you predict that they will ultimately find the SaaS part of the business to be too expensive to run with nominal return as compared to the profit margins of on-premise software?

That's a troubling thing because in the early days they can kind of do it by saying, "this is a hot market so we need to invest." They spend a lot of money on this and the data center and they really treat it as a science project, saying "we'll see what we can learn and we'll do this for a little bit." Then they get minimal recognizable revenue, then they start saying, well this is interesting so how long do we want to keep this little science project going? Should we try to spin this off or sell this to somebody? Then they have a bad quarter and decide we have to really retrench so let's focus on our core business.

Look at Business Objects. Their on-demand division is one of five divisions and it's generating almost no revenue -- so little revenue that they haven't ever reported how much revenue it is. As soon as they see their core query and reporting revenue dry up a bit. Business Objects announced its first on-demand offering in March or April of '06. If you look at the quarterly analyst call they do, initially out of the maybe 30 slides, maybe five or six of them were about the new on-demand initiative. The next quarter, there were about one and a half slides on it. Then they had a bad quarter and went to single bullet item on one slide two quarters later. They were already starting to pull back from it, because all the analysts on the call were saying, "you're seeing some erosion in the core query and reporting business. Is that because on-demand is starting to cannibalize the other business?"

It's a very, very difficult challenge. I think that their having to face these challenges creates great opportunity for companies like LucidEra to take that nuclear reactor out of the basement and let us manage it for you. All we need is access to your data and then we do all the heavy lifting.

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More interesting SaaS articles and announcements were all over the media today, including a piece by Ben Woodhead of Australian IT analyzing Salesforce.com's apparent dream of becoming the underlying platform for Software-as-a-Service using Force.com and the Apex language. In addition, Yahoo! announced plans to buy open source collaboration company Zimbra for $350 million, a move that ZDNet blogger Phil Wainewright called smart and speculated whether Yahoo! might be going after Exchange rather than Office with the move.

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Dave Rosenberg of InfoWorld posted a blog entry following the Dreamforce event in which he reflected on SaaS vs. Open Source. He pointed out a difference between companies that form a "community" vs. those that have an "ecosystem." Clearly open source has much more of a community among developers and SaaS-delivered software is more of a service that is consumed by users. Matt Asay of CNET also commented, saying that "Open source offers the better promise of ecosystem. Ergo, open source wins." But is there even a battle between open source and SaaS? Don't most companies choose SaaS because it's simple and easy to set up, whereas open source often requires configuration and customization? One might think the two served different purposes and aren't really at war at all. As Rosenberg even concluded, a good majority of "new school" SaaS companies have built their sites on open source.

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CRM giant Salesforce.com kicked off its annual Dreamforce user conference yesterday, and as expected, the show is spawning numerous interesting SaaS announcements. For starters, ebizQ has posted the most interesting new product announcements. Have a look at the following:

• Informatica Integrates Data-as-a-Service for Salesforce Customers
• Business Objects Offers BI SaaS
• Fujitsu Consulting Acquires OKERE for CRM SaaS
• Mulesource to Offer Integration-as-a-Service
• Boomi On Demand Rolls Out on Salesforce.com's AppExchange

IT analyst Guy Creese of the Burton Group posted a short report on his blog commenting on some interesting apps, including Business Objects and SpringCM. He also makes the observation that another advantage of SaaS in addition to the most frequently cited pay-as-you-go model and browser access is "being able to buy pre-built complementary applications offering functionality that used to demand hiring a systems integrator."

Giving some perspective on the company's current thinking, Salesforce.com VP Adam Gross spoke with Darryl K. Taft at eWeek about the conference and had some things to say about industry resistance to multitenancy as well as Microsoft's resistance to the SaaS model. He also responded to criticism of the Apex language. More here.

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An article from InformationWeek examines the virtual appliances market, an idea promoted by virtualization pioneer VMware. The article points out that virtual appliances are software bundles that contain many server-like functions without any hardware, and then an application and operating system are set up to run inside the appliance.

The virtual appliance idea targets many of the same customers as SaaS, and the article points out that some companies may prefer the virtual appliance route since it would keep data in-house. Big vendors are starting to sell software to run in a VMware environment and VMware is boasting more than 2,500 virtual appliance downloads per day. But will these appliances rival SaaS? Time will tell.

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Silicon Valley's Trend Micro Inc. is a specialist in digital security products. At the end of July, the company announced SecureCloud, a business security platform delivered through Software as a Service. The company had previously specialized in on-premise software, although it also offered TrendSecure, a consumer SaaS security platform. To get more information about Trend Micro's intentions, we spoke to John Maddison, general manager of network security services at Trend Micro.

What inspired Trend Micro to release a product through SaaS?

Maddison: About five years ago, customers started asking if we could provide a service rather than a piece of software for specific applications. Second, the latest generation of threats -- which we've terms web threats -- are so rapid and the need for updates is so rapid that you need a service
infrastructure and traditional updates won't work.

How does SecureCloud integrate with onsite email servers?

Maddison: SecureCloud provides the first line of defense. It's a kind of a gateway in the cloud that filters and scans and provides a security mechanism for email traffic, then passes email traffic on to email services. About 92 percent of email traffic is gone by the time it reaches the reader. It's the first line of defense against attacks.

How can companies be sure of the security of software delivered through SaaS when they don't host the software?

Maddison: Years ago, that was a big concern, but attitudes have changed a lot because some huge companies are using or considering software-as-a-service. Companies have a strict policy in place with operations teams and with anyone who comes in contact with data centers. Tier 1 data centers will be protected by fingerprint scanning and SAS 70.

Do you agree with forecasts that SaaS will eventually become the dominant mode of software delivery?

Maddison: There are a few analyst forecasts that up to 10% of existing software apps will be replaced by SaaS. I see no reason to argue with that. I think there are two elements; certain applications will get replaced but I also see there's a lot of opportunity to complement existing web applications. I don't think SaaS is going to replace traditional software delivery totally.

Do you anticipate additional SaaS releases by TrendMicro in the future?

Maddison: We're looking at probably releasing a new service each quarter and an update on existing services each quarter. One thing that's quite striking is that the SaaS model allows companies to get smaller releases out there more quickly so that, instead of waiting for 12-18 months for a software release, we're able to get smaller releases out there much more quickly. The idea of a new feature on a monthly basis is quite a new model for customers.

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Next week should be an announcement-heavy one in the SaaS world, with SAP planning its preview of the much awaited A1S project and Salesforce.com holding its Dreamforce Conference in San Francisco. InfoWorld reported on the product that the CRM giant will introduce, which is currently called Visualforce. Visualforce will introduce to customers the ability to design customized application interfaces to suit their needs.

Stacy Cowley of CMP also reported on Salesforce.com's plans, mentioning also that the company will have "a big megaphone" for its evangelizing at the conference, which opens on Sunday, and that the company has a history of kicking its Dreamforce conference off with big "splashy" announcements.

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Internetnews.com's David Needle reported on an announcement that IBM will team up with StrikeIron to offer what Needle called Data as a Service (DaaS). As a part of the deal, IBM's Mashup Hub will now include seven of StrikeIron's data services that can be dragged and dropped into IBM's QEDWiki, which is a browser-based gtool for creating mashups or other links between Web-based information services. Read more.

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THINKstrategies has announced a new set of packaged services aimed at helping new SaaS companies and managed service providers to ensure that they are ready to deploy their solutions. In a press release, THINKstrategies states that it has developed its Readiness Assessment Services (RAS) in response to increasing demand for these solutions among end users and the discovery that many companies that are trying to capitalize on the trend are not, in fact, fully prepared to succeed in the markets. In its readiness scorecard, THINKstrategies will assess clients in multiple areas such as service delivery platform, pricing, packaging, market segmentation, and more so that the companies can address weaknesses before going to market. Read more.

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Another couple of interesting announcements came this week at BEAWorld. First, EnterConnect Inc. and BEA announced a partnership under which BEA will provide the infrastructure to power SOAAPPS.com, which will be a business on-demand marketplace for mid-market executives seeking enterprise applications through SaaS. In its press release, EnterConnect predicted that the move would "empower independent software vendors to build, market, sell, deploy and manage SaaS offerings" and to better take advantage of growth in the SaaS market. More here.

BEA also announced a new project, code-named Genesis, in which it aimed to bfring together a number of Web 2.0 technologies into a business application platform to facilitate assemby and deployment of dynamic business applications. eWeek's Darryl K. Taft reported on the announcement and a speech by BEA Chairman and CEO Alfred Chuang, in which Chuang stated that the family of products that comprise Genesis will also facilitate BEA's introduction of SaaS functionality.

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It seems Capgemini's decision to support and offer Google Apps has sent ripples through the media and put a spotlight on the enterprise readiness of Google Apps Premier Edition. John Soat of InformationWeek's CIOs Uncensored weblog said that the Capgemini announcement meant that maybe more CIOs should take Google seriously as a business software provider. Soat originally commented on a Burton Group report questioning the enterprise-readiness of Google's SaaS tools and pointed out that most CIOs might find Google's limitations "limiting," but Soat points out that the Capgemini move gives a new level of credibility to Google although questions still remain about functionality and enterprise support.

Reporter Paul McDougall, also of InformationWeek, reported on a Gartner bulltein in which Gartner analyst Ben Pring predicted that the Capgemini/Google deal would further boost the SaaS market in general, writing, "Capgemini would not align itself with Google and risk upsetting its relationship with Microsoft if it did not sense among its customer base of large multinational corporations a genuine interest in Google's application initiatives."

CNET reported further on Microsoft's retort to the announcement, in which it urged users to ask themselves ten specific questions about Google Apps, scorning Google's history of releasing incomplete products as "beta." CNET quotes Ovum analyst David Bradshaw as saying, "Microsoft is paying (Google) the second most sincere form of compliment, in treating them as a serious rival."

ZDNet's SaaS blogger Phil Wainewright was skeptical of the announcement's importance, writing in a blog post yesterday that Google and Capgemini "just doesn't add up". Wainewright asserted that making Google Apps more mainstream by packaging it into the Capgemini model was unlikely to sway any mainstream-inclined enterprise away from Microsoft Office, and that companies inclined to deploy Google Apps would not want it "all smothered in consultant goo."

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Application life cycle management company Serena Software today announced a new SaaS-based Mashup Exchange. The tool, called Mashup Composer, will be made available for free to all users, and customers will pay only when the Business Mashup is put into production. In the press release, Serena said that it is the company's first step in an effort to merge Web 2.0 technologies with enterprise systems and that it hopes to make it easy for business users to create new composite applications without specialized resources.

Serena Software was also discussed last week by Scott Wilson of the CIO Weblog, who posted about the still pervasive fear of SaaS and user-driven content management. Apparently Serena's announcement of the Vail mashup platform (the original codename of what became Mashup Composer) sparked some discussion that suggested many companies are still afraid of taking mashups out of the hands of the IT department.

Wilson cited the discussion at a blog by Chris Murphy of InformationWeek where many users responded to the announcement of Serena's intentions with skepticism about targeting non-IT users with a mashup creation tool, pointing out that, after all, IT departments were there to ensure corporate IT policy was being followed and that implementations were sound.

What do you think? Post any comments below. We're interested to hear your thoughts.

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The news of the day is Capgemini's partnership with Google to boost the enterprise version of Google Apps Premier Edition. The global consulting services company said the move will "extend its portfolio of desktop solutions, enabling it to support more client employees, regardless of their locations, platforms and roles." In explaining the decision, Capgemini cited Gartner's estimates of 25 percent annual growth for SaaS through 2010 and its hopes to capitalize on SaaS growth by adding Google Apps to its desktop solutions portfolio.

Every day seems to bring multiple announcements of new SaaS products and services, and it seems that nearly all applications are to be delivered in SaaS format sooner or later, if they aren't already. Google Apps is still considered lightweight in comparison to Microsoft Office by most, but that could certainly change. Juan Carlos Peres of InfoWorld reported on the news with the headline "Web-based desktop apps get serious," but was quick to point out that Capgemini's CEO did not expect Google Apps to displace Office but rather to fill the niche needs for enabling document collaboration and bringing Office-like capabilities to more workers.

ZDNet's Dan Farber also commented on the move, pointing out that it may not be an easy sell given that companies might be concerned about entrusting data to Google and about the lack of offline capabilities in Google Apps, but that it was a good move for both Capgemini and Google overall.

Mary Jo Foley, also of ZDNet, had an interesting post in which she cited Microsoft's apparently official reply to the Capgemini announcement. The announcement, attributed to a "corporate spokesperson," claimed that competition was good for the industry overall but then listed ten questions that it suggested companies ask themselves before switching to Google Apps. The concerns seem to be valid, but thus far no one is really touting Google Apps as a replacement for MS Office, so one would wonder why the apparent defensiveness, and why Microsoft doesn't just add more collaborative features to MS Office.

Foley also posted a commentary on the announcement, in which she brought up some interesting points about price, demand, and integration. She also pointed out that no one has yet fully explained the claim that Google Apps is "complementary" to Office despite the frequent denial by Google that it sees the application as a competitor to MS Office.

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Dan Farber of ZDNet reported yesterday on a presentation made by Adam Carson of Morgan Stanley at the Office 2.0 Conference in San Francisco. Carson has been "preaching the Web 2.0 gospel" to Morgan Stanley and reported that the company has 70 to 80 Web 2.0 projects in the works, which are gaining traction to Morgan Stanley's largely under-35 workforce. Carson made the interesting case that embracing Enterprise 2.0 technologies will impact recruiting and organization in that the new models of work will appeal more to the younger generation of employees but may be challenging for the older generation of employees to learn and adapt. Farber lists more of Carson's points here.

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In eWeek's Channel Insider, Jeff Kaplan writes that a big question in the SaaS market is about the existence of a viable channel opportunity for solution providers that handle legacy applications. More and more service providers are trying to jump on the SaaS bandwagon, so the channel question is an interesting one. Kaplan offers the example of XO communications, which has recently teamed with Jamcracker to deliver applications to SMBs. Kaplan suggests that SMBs and enterprises alike are increasingly interested in offloading some operations to solution providers in order to focus more on core business. More here.

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KMWorld Magazine has released its 2007 list of trend-setting products, and not surprisingly given the popularity of software-as-a-service, several SaaS applications made the cut. To name a few, DocZone.com and NetDocuments were both called trend setters, as were IntelliEnterprise, Tacilent Corp., and Astoria On-Demand. The list will be featured in the September edition of the magazine. Read more.

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Seems like the market for SaaS-based Web collaboration tools is continuing to attract vendors. Dan Farber at ZDNet posted yesterday about Intuit's plans to pour some new resources into QuickBase, a Web collaboration tool it acquired in November 1999. But the SaaS boom may have the company seeing dollar sign potential in QuickBase, as Farber reports that the company has added 50,000 users since January including 53 Fortune 100 companies.

A couple of weeks back, Eric Lai of ComputerWorld also commented on QuickBase and Intuit's other SaaS plans, including that Intuit plans to release an online version of Quicken to complement its QuickBooks Online Edition, which targets small businesses. Lai quotes Intuit QuickBase general manager Bill Lucchini as saying that Intuit's upper management are "really fired up about SaaS."

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IT Redux's Office 2.0 Conference kicks off today in San Francisco. This year, the producers took the step of offering an iPhone to all attendees in order to drive home the point that the future of the office isn't all about cubicles and paper shuffling. Last year's Office 2.0 conference saw the launching of Google Docs and Spreadsheets, and this year, more than 20 new products will be launched at an event called "Launch Pad" scheduled for tomorrow. Ismael Ghalimi, producer of the event, joined ebizQ recently to discuss Office 2.0 and to offer a preview of the conference. Let's stay tuned and see whether some cool new SaaS applications will be announced tomorrow.

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An interesting disagreement occurred in the SaaS blog world when, over the weekend, blogger Anshu Sharma posted a rant about Software-as-a-Service in which he alleged that SaaS proponents tend to believe there is only one right way of doing SaaS but then tout large annual revenue figures that include multiple variants of SaaS, and then suggested that SaaS purists should consider SaaS to be a small niche market. But self-proclaimed SaaS purist Phil Wainewright of ZDNet disagreed. Wainewright responded that such posts give "false succour" to conventional software industry execs who don't want to accept the need to make radical changes and who want to believe that pursuing SaaS variants keeps their offerings current. More here.

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Tim Ratliff of Hubspan has posted an interesting case study on EDN about "integration-as-a-service," or IaaS. Ratliff calls IaaS a close relative of SaaS, in which companies might access a single hub that connects all trading partners facilitated by widespread acceptance of service-oriented architectures. Ratliff profiles a venture in Europe called Tradeplace, which connects household appliance and consumer electronics manufacturers, and claims that the organizations using the hub are experiencing a combined 22 percent increase in operational efficiencies. Will IaaS be a future trend? Time will tell. Another option, of course, is integration through SaaS, which is offered by some companies such as eVision, whose John Delaney recently joined ebizQ for a First Look podcast.

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OpSource, based in Santa Clara, Calif., is a big name in the SaaS world. Offering infrastructure technologies that power numerous SaaS providers and on-demand companies, OpSource has won numerous awards from various industry bodies and has been ranked highly in a number of industry innovator lists, so we thought it would be interesting to ask a few questions of OpSourceas CEO Treb Ryan.

Q: Please describe OpSource's offerings in a nutshell.

A: OpSource delivers Web applications and SaaS for on-demand companies, with hundreds of applications, millions of users and billions of transactions supported daily.

Q: What sorts of business problems usually lead companies to solutions like
OpSource's offerings?

A: Delivering services via the Web is not in the DNA of software companies.
Instead of diverting resources to build SaaS delivery capabilities internally, OpSource helps our customers meet the challenging customer requirements for on-demand, live, 24x7 access to software as a service. Delivering on-demand software that is highly available and reliable, in a scalable, secure environment, requires an entirely different customer support and operational infrastructure than on-premise licensed enterprise software.

Q: Is security a big problem when it comes to SaaS? What challenges do SaaS vendors face in guaranteeing security of applications?

A: Data security is actually a big benefit of SaaS. Good SaaS applications are always locked down in secure data centers, and are usually SAS 70 audited (all of our customers are because OpSource is SAS 70 Type II audited) and offer SLAs on data protection and security. Most current security issues are related to users that have lost laptops with critical data or tapes that have gone missing. This doesn't happen with SaaS applications as the data never sits on the laptops. See to Phil Wainwright's excellent blog post on the security advantages of SaaS.

Q: Where do you see SaaS going in 10 years? Do you think it will become the dominant mode of software delivery?

A: Absolutely. IDC estimates that the worldwide software-on-demand delivery model will reach $14.5 billion by 2011, representing a compound annual growth rate of 33%. Not everything will be delivered on-demand, but certainly the more innovative applications will be delivered via the Web. We're seeing that already. SaaS has enabled a level of innovation that did not exist before.

Applications that were merely a glimmer in someone's eyes a few years ago are now a reality because of SaaS. The ability to collaborate and leverage Web 2.0 technologies has completely changed the business landscape, whether it's the way businesses operate with consumers (eBay, Google, Amazon), or the way businesses interact with other businesses. For example, Brightidea enables businesses to work together more effectively across the workforce to spur innovation and new ideas; Etology enables buyers and sellers to easily conduct online advertising transactions, while Mediserve enables patients and doctors to collaborate post-op during the rehabilitation period.

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Clint Boulton of eWeek reported on an interview with Burton Group's Guy Creese about Google Apps Premier Edition, suggesting that it "may not be all it's cracked up to be." Google Apps is cheaper than al,ternatives such as Microsoft Office, but Creese suggests that businesses not forget to use "due diligence" in evaluating the software, which originated in Google's consumer product line, and he points out that the individualized setup of admin needs could cause problems in an enterprise setting. Read more.

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