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SaaS catching on with enterprises

29th Nov 2006
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Large companies are buying in to the idea of software-as-a-service (SaaS) according to a new survey of CIOs by management consultants McKinsey & Company as and Microsoft make new SaaS gambits.

The survey found that 61% of North American companies with sales over $1 billion plan to adopt one or more SaaS applications over the next year, a dramatic increase from the 38% who were planning to install SaaS apps in 2005.

CIOs are attracted by SaaS’s lower up-front costs, lower total ownership costs, and faster implementation than traditional licensed software. That substantially increases the likelihood a new application will provide an attractive return on investment.

The most popular SaaS business applications, according to the McKinsey study, are for human-resource management, billing and order entry, and sales management.

CIOs are also moving away from the idea that they should own their entire IT architecture in favour of a hybrid model that blends components maintained internally with elements hosted by third parties.

This week saw and Microsoft making further SaaS announcements that were designed to attract enterprise attention. is introducing a suite of integration applications which it hopes will remove an obstacle to the enterprise in the shape of integration with installed systems.

ApexConnect is a family of integration services that will allow enterprises to integrate their complex on-premise systems with on-demand point applications offered by

A key feature of the technology is ConnectOut, an outbound API (define) that lets's on-demand applications send data to the including middleware systems, message busses and other on-premise software applications in real time.

Currently, data is synched up between the two systems, usually overnight, based on a call from the legacy system to the on-demand application. But the new functionality means that new customer data, such as a new address of a closed sale, can be immediately reflected in a company's enterprise database or ERP.

ApexConnect also includes a native connector for Oracle 11i for synchronising account information between Salesforce and the Oracle database.’s mission statement has been to be the death of software, but the new integration initiative indicates that the company is ready to concede that it will have to work with on-premise software vendors to become a significant player in the large enterprise space.

The ConnectOut feature is currently scheduled to be available in conjunction with the release of Winter 07. Customers will not be charged extra for this feature. ConnectOracle will be available in early 2007 at an annual fee for Salesforce

Finally, released integration software to connect ApexConnect with technology from 25 partners, including AboveAll, Business Objects, Bluewolf Group, Bridgewerx, Cast Iron, Composite Software, Data Backbone, Dynamic Ventures,, Ilink, Informatica, Integration Technologies Inc., InvisibleCRM, Ipedo, Jitterbit, OpenAccess Software, OKERE, Pervasive, Tibco, Salescentrix, Scribe, Sesame Software, SGC Software, Synergex and TwoConnect.

Meanwhile Microsoft – which has been slow to come to the SaaS table – has set up two European outreach programs that will assist its developers in establishing SaaS-hosting channels. The SaaS Incubation Centre Programme and its SaaS On-Ramp Programme target independent software developers (ISVs) by offering them consulting, technical data, access to hosting services, and discounted licensing for the first year.

To take part, ISVs have to be enrolled in Microsoft's Service Provider License Agreement (SPLA), which lets them license Microsoft software on a monthly basis to their end-user customers. Microsoft will also help them to find a hosting partner and offer discounts on some of its software for the first year.

“Microsoft recognises that many ISVs are hindered in delivering SaaS offerings because they lack the necessary tools and resources,” said Michael Korbacher, Director, EMEA Web & Application Hosting, Microsoft Communications Sector. “Microsoft can help all types of ISVs enter this industry by reducing the cost and complexity of delivering hosted software and crucially, by connecting ISVs with key distribution and operational channels such as telecoms operators and hosting providers.”

Two Microsoft partners—NTT Europe Online, a specialist in managed hosting services, and 7global, a London-based hosting service—will open and operate the first European incubation centres in the UK and all of Europe. The arrangements with NTT Europe Online and 7global are not exclusive to Microsoft.

The hosting partners will use Microsoft's hosting platform to deliver the applications. The platform includes tools for setting up service-enabled applications and for tasks like user provisioning, performance monitoring and usage tracking.

Microsoft has been a recent convert to the SaaS cause, but now claims to be firmly behind the movement. "What is happening in the SaaS space is something that we want to use to make our delivery more efficient and provide more choice to customers," said Microsoft Business Solutions boss Satya Nadella recently.

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