Some good commentary from Steve on cloud-computing and Tom Austin's view of it in

There's certainly no shortage of pundits when it comes to cloud-computing and Software-as-a-Service. There does seem to be a definite shift away from the hyperbole to a more balanced perspective. I think Microsoft's Software+Services story has always taken this balanced approach. Cloud-computing and SaaS have enormous potential and will no doubt be hugely disruptive. But that's not to say that on-premise or personal computing is dead. Both can play a significant role in the future of IT.

I would also continue to assert that most of the interest in SaaS is about finding a healthy balance in the two extremes of value perception Minimum Cost<->Maximum Functionality.

The "innovators dilemma" articulates this well. When customers stop believing in the unique value of a product or service and view it as a commodity they begin to step down their investment across three tiers:

  • Top Functionality/Maximum Value "I will pay a premium, I am investing"
  • Convenience "I want it to be easier"
  • Minimum Cost "I want to pay the least that I can get away with"

SaaS falls neatly into the convenience box, Open Source very much in the minimum cost box. At least that used to be the case. Now that a more comprehensive assessment of SaaS is taking place, the perception is shifting towards the unique value that it might bring. Now that the focus is back on providing value and as a category of investment a more balanced opinion is immerging. Its less about "get rid of my IT department and all it's servers, they're costing me a fortune" and more about "how can this help me transform my business?".

//steve clayton: geek in disguise : The End Of The IT Department – Is It In The Cloud?