Last week two important news were issued on related matter. The first one is a survey reporting that around 30% (double of 2004 figures) of US SMBs are currently using SaaS solutions (software-as-a -service), and that MBs (medium sized firms 500-999) are significantly (x6) spending more than SBs on SaaS. The report also says that the top three SaaS applications MBs are currently using are payroll processing, banking/finance and human resources management. The market, however, has yet a long road to reach the mainstream. Vendors are Microsoft, SAP, IBM, Google or smaller players such as NetBooks, Longjump or Coghead.
The second announcement came from Microsoft. It unveiled a new SaaS effort. Up to now, Microsoft mainly directly addressed the large corporation market, leaving the small- to medium-sized business (SMB) market to third parties. With the new SaaS announcement, Microsoft targets all organizations of all sizes. The SaaS plan includes adapted versions of its Exchange Online and SharePoint Online as a per-user subscription, and would be extended to SaaS versions of the Office Communications Server (OCS) unified communications (UC) software and LiveMeeting Web-conferencing software. This could create some tension with its resellers, but Microsoft insists it is a Software + Services strategy, leaving some room for resellers and third parties (??).
Without stopping selling its software as products (with licenses), SaaS is targeted by Microsoft as an alternative
delivery method that has many advantages such as security (99.9% availability), easy upgrades and flexibility, and also bypassing software supplier' s dominant position (multiple apps embedded) critics. In this game, Microsoft directly attacks Google for the world ASP pole position. It will be interesting to see if it can duplicate its success in the PC apps' world.