Greater Breadth and Depth

In the early days, the perception of SaaS was that the offerings had limited functionality, were limited to CRM, and/or were targeted at the SMB market.

Today, while CRM dominates the on-demand market, there isn't a segment of the software spectrum from ERP to supply chain that isn't represented by a SaaS provider.

Generic functionality of the offerings is sufficient to meet the needs of most organizations, and specialized vertical offerings go even further. If customization is needed, on-demand technology has progressed to the point that it can be done much easier and more cost effectively than before.

SaaS providers are also using technology such as Web services to make it easier for their offerings to integrate with their customers' infrastructure.

All of these factors combine to make the on-demand model more attractive for the larger enterprise, and as a result, we are seeing increasing adoption in this market segment.

Delivering Value

But the real driving force for acceptance of SaaS today is the increased focus of CIOs to deliver value. This means expending resources on projects that are mission-critical to the company.

CIOs do not want to spend time and resources installing and maintaining transactional applications that fail to differentiate the business or provide a competitive edge for the company. They want to provide the functionality required to run the company with the least amount of resources expended.

Improved technology, converging economic models, greater security (real and perceived), offerings that meet the functional needs of the enterprise, and CIOs working with leaner resources and a greater need to deliver real value have all impacted the attitude of companies considering SaaS and have breathed new life into a once left-for-dead industry.

K.B. Chandrasekhar ("Chandra") is co-founder, CEO, and chairman of Jamcracker, a provider of on-demand delivery and management software. He is also the co-founder and chairman of e4e Inc., a global technology holding company, and chairman of Aztec Software and Technology Services Ltd., a publicly traded company on the Bombay Stock Exchange.

Article adapted from CIO Update