The SW market will continue to be segmented by those that need something that is good enough versus those that insist on significant customization. Perhaps in the future hosted applications will be Â?good enoughÂ? to meet the needs of the majority of customers. There will always be a population of customers that will insist on more flexibility. If these customers cannot buy it they will build it.

SaaS and open source offer some interesting challenges to the traditional SW licensing model. I believe that services will play a more critical role in the future of the sw market and that traditional licensing models will be under pressure to evolve within next few years.

The software world will continue to evolve. I believe that there are three new frontiers:

1. Web-based software including SaaS (Software as a Service). With the improvements in user experience through rich media (such as Flash and AJAX) and the increasing ubiquity of the web, more and more things that used to be done on the device (PC, PDA, etc) will be done on a server connected to this device by the internet. Companies like Google see this as their opportunity.

2. The co-existence of open source, inexpensive, and brand name software. Increasingly we will have a choice between "free", "cheap", and "good" software tools. Much of the open source software starts out "free", but isn't except for people who can understand and support it themselves. It appears to have the highest market share for infrastructure (such as the Linux operating system) and standardized tools (such as the Apache web browser) in which it is preferable to having something stable and standard instead of something that continues to have additional features. There will continue to be opportunities for innovative solutions (good software) supported by a brand name that customers can trust. Examples are Adobe Acrobat and Microsoft Excel. However there will also be "cheap" and "free" alternatives such as the many other PDF creating tools and Star Office / Open Office. The customer will primarily chose between these alternatives based on brand recognition, product features, and the quality of the support.

3. The migration from a single PC platform to multiple devices. Increasingly, we will be able to access the same information on a mobile device (cellphone, PDA, Blackberry, etc) as we can on our PC or at a kiosk and these information retrieval devices will be built into other products such as our car.

The trend as I see it will be to provide our information securely and privately Any Time, Any Place, Any Device. In addition, we will be able to do this at any price, depending upon the features and support that we want. We will also be able to buy this or rent this. However the rental market will continue to grow as support becomes more of the value of what we purchase instead of infrastructure, which is becoming more commoditized.

Kerri, Here's my 2 cents....

First let me say that the moderators' comments above are spot-on. While the SaaS business model is poised to grow, and like most authorities I believe it will grow in importance in the next 3-to-5 years, there'll remain a sizable portion of the market for purchased applications in the foreseeable future.

SaaS faces a number of sales objections that make it difficult to sell some (many?) people on the SaaS business model. One objection is that people *believe* (whether it is truth or not) that applications running on a self-hosted server makes it somewhat easier to integrate/interface with other applications and/or it is more secure. And people believe they can run their own app's as cost efficiently as an outsourced solution. And people like the "control" they have over a purchased solution. And there are other objections.

With that being said, for a number of reasons (primarily security and security maintenance but also the total cost of client hardware/software) I believe you'll increasingly see thinner clients (i.e., more web-based applications, less windows/fat client applications) whether they are delivered via SaaS or as purchased app's.

Hope this helps...

Kerri ... I notice in your signature you are a CRM Goddess. Let's say the tables are turned. Do you think "On-Demand" software is the prevailing model for CRM?

My take is that accessible anytime, anywhere is ideally suited for CRM apps. But I'd be curious on your take?

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Robert Dubicki

So Kerri ... how do you then see SaaS fitting into the CRM picture? Salesforce.com provides APIs and other capabilities to integrate.

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Robert Dubicki

Kerri... so if I understand correctly, you believe then that:
1) Integration
2) Data Security
are the two biggest issues which will hold-back "software as services".

Fair enough.

But are these not also issues with conventional fat-client apps? I can lose my laptop in the airport. Or be dealing with all the sync issues with back-end systems changing. I don't think that fat-client apps have that much of a leg up over web-enabled apps. Do you?

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Robert Dubicki

KERRI - You are my Hero :)

I agree with every word.

But don't worry, salesforce.com spends the millions brainwashing people but when they are fed up playing with the "hotmail" like interface and want to start being productive they come to us :D

Our sales cycle to salesforce.com customers is MUCH shorter than to customers who lever actually tried it out.

I sometimes recommend people to go play with it for a while and come back when they are ready to go to the next level.

If someone wants to play with the web based interface they can just use one of the many open source projects why pay so much for a bunch of html formsÂ??!? Â? if it is the integration interfacesÂ? GOOD LUCK!

Roy Daya, CEO
www.digital-clay.com

DigitalClay is a smart application engine for building dynamic software solutions without coding.

http://roydaya.com