Software-as-a-service (SaaS) has been on a lot of IT executives' minds the past couple of years, and it's easy to see why.
Your vendor installs it. Your vendor maintains it. You don't have to worry about upgrades or capacity problems, and you only pay for what you use. What's not to like?
The SaaS model has been so successful in the CRM space that it's now migrating to business intelligence and supply chain management, operational areas that were once considered sacrosanct as far as SaaS is concerned. (Interestingly, a similar incursion is taking place with open source software, again led by CRM.)
As more companies enter this space -- both pureplays and major infrastructure companies like Microsoft, SAP and Oracle -- one of the major competitive issues has become integration. One evangelist recently proclaimed that SaaS BI could collect data "from virtually any source." This is a stretch to say the least. But SaaS players will have to integrate with back-end systems to deliver the functionality businesses demand.
In this regard, the majors have an edge. Microsoft, for example, offers an impressive vision in which its Office products will seamlessly integrate with enterprise applications like CRM. Presumably, the company is working on extending this approach to its SaaS offerings.