A regular round-up of stories about web-based applications from our new sister site, BusinessCloud9.com [1].

Don't make assumptions about SaaS, says Gartner [2]

25 Feb Market research firm Gartner Group has warned potential users not to assume that software as a service will be cheaper than on-premise systems.

In its report Fact-Checking: The Five Most-Common SaaS Assumptions, Gartner determined that SaaS is cheaper during its first two years of use, but the total cost of ownership over five years would be lower for on-premises software. It went on to knock down four other common misconceptions:

"There has been a great deal of hype around SaaS," warned Gartner vice president Robert DeSisto. "As a result, a great number of assumptions have been made by users, some positive, some negative, and some more accurate than others. The concern is that some companies are actually deploying SaaS solutions based on these false assumptions.”

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Security spending set to soar [3]

23 Feb Three-quarrters of European businesses plan to increase their budgets to secure Cloud computing and software as a service (SaaS) over the next 12 months, according to Infosecurity Europe. The organisation questioned a panel of 20 chief information cecurity officers at large companies. In addition to the anticipated budget increases, all of the executives said they were concerned about the lack of standards for working in the cloud.

"Cloud Computing and SaaS appear to have a pivotal role to play in this new evolving environment where CIOs are challenged to add value to the business and CISOs required to ensure that new services are reliable and secure," said Infosecurity Europe event director Tamar Beck."

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Contact centres and social networking [4]

23 Feb New "multichannel" contact centres are evolving that blend online social networking into the customer experience, according to Datamonitor's Aphrodite Brinsmead.

In a Cloud Agenda [5] article, she explains how economic pressures are accelerating this Web 2.0 trend.

Traditional telephone-based call centres are rapidly being supplemented by email, SMS, interactive voice response (IVR) and instant messaging (IM) communication channels. In the current economic climate, companies are more focused on customer retention and cost saving and these new channels not only represent a convenient way for customers to communicate with the enterprise, but also an opportunity to save on agent costs.

During 2009 contact centre vendors and enterprises will begin to leverage Web 2.0 tools such as blogs, social networking, forums and search engines to share information and create the truly multichannel contact centre, the article predicts.

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NetSuite profit bodes well for wider cloud market [6]

17 Feb NetSuite increased its revenues 40% in 2008 to $152.5m, but still did not quite turn a profit, reporting a "non-GAAP loss" of $2.5m.

Responding to those who questioned whether the company could turn a profit, NetSuite CEO Zach Nelson said its fourth quarter operating profit provided the answer.

NetSuite's figures hold significance beyond the company itself, according to Ovum analyst Warren Wilson. "For one thing, NetSuite's results suggest that a grim economy may favour the SaaS model, with its rapid, low-cost adoption, over on-premise software, with its high license fees and long deployments," he commented.

"If NetSuite can post consistent profits, it could be the first to demonstrate that SaaS is viable not just for CRM (the market pioneered by SaaS poster-child salesforce.com) but for mission-critical ERP, the system of record at the core of the business. That would be a strong indication that customers are growing comfortable with both the reliability and the security of SaaS - two persistent criticisms of this delivery model."

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Why "Big ERP" is scared of SaaS

2 Feb - In a recent post in the Cloud Agenda section [7], CODA group marketing director David Turner turned his attention to on-premise software vendors who were taking pot shots at Cloud-based applications.

The last great growth wave in business software came in the 1990s on the back of integrated enterprise resource planning (ERP) applications from the likes of SAP, Oracle and Lawson. In August 2008, Lawson CEO Harry Debes claimed that the SaaS market would "collapse within two years" and made it clear that Lawson was actively avoiding a SaaS strategy.

Bill McDermott, president and CEO of global field operations for SAP also dismissed “half-baked applications from unproven SaaS upstarts” who would need another 36 years to achieve what SAP has done.

The outbursts both come from "Big ERP" vendors who supply technologically heavy systems that are slow to implement, hard to integrate with and extremely difficult to change or re-configure once implemented. "Clearly both are threatened by the SaaS movement," writes Turner. "The inherent speed of development, flexibility and ease of deployment contrast sharply with the experience of ‘Big ERP’ users. These critics make the mistake of assuming that because many early applications have been relatively trivial or functionally shallow - which, let’s face it, they mostly have - that SaaS applications can never be 'enterprise strength'."

Turner accepts that to date, no enterprise ERP vendor in the SaaS space has made a real impact on the market in the same way that companies like SAP and Agresso did in the traditional ERP software space. What we are seeing instead is a repeat of what happened with business software in the 90’s where a new raft of best-of-class applications is being born. "This trend will never go away, as businesses have different requirements and specific systems that they need to support... All new technologies present challenges but enterprise strength cloud accounting is becoming a reality and in a lot less that 36 years!"