Innovation for Partners in the UK

SaaS is not a software revolution

That's right - SaaS (Software as a Service) is not a software revolution.  Someone from a large Internet company recently referred to Microsoft's software as "old school" because it runs on the desktop.  Heck, even some of our own executives have implied SaaS is the future. It's not. Service-based software is not the sole vision of the future at Microsoft.

SaaS is a very real thing and every company should think about the implications. It creates new business models and opens up the door for some interesting B2C and B2B opportunities. It in no way negates the need for desktop (or server) software.

If I were to give up local software for software that was only available when connected, I'd lose anywhere from 50 - 75% of my working day.  I travel a lot to and from work and spend a large amount of time on airplanes, but even for the most connected individuals with fancy little 3G cards would lose a significant amount of productivity if they had to be online to run software.

But it's early days, right? No - it's not.  Broadband access is becoming more and more ubiquitous but to think it will someday in the near future (next 5 years) be anywhere and everywhere with 100% uptime at affordable prices is too idealistic for my tastes.

The only analogy I can think of is equating SaaS to airplanes and traditional software as trains / cars / metros.  The airplane is a fantastic invention - without it the world would be much different but we probably shouldn't get rid of cars and other local transportation options just yet.

So how would I look at SaaS?

A good option is to think about it as Software + Services.  Some chatter about this surfaced on a few of our internal aliases at Microsoft and I really like the way one person described it.  Services are software and require a platform to run.

The platform, in some instances, can be a simple AJAX-friendly browser (Firefox or Internet Explorer), it can be a slightly richer application that requires connectivity (AJAX + WPFe or .NET or Flash), or it can be a premium desktop experience (C++, WPF/.NET, Java) that exposes additional functionality when the user is connected to the Internet but is perfectly accessible offline.

There's a need for each of these scenarios now and the foreseeable future. There's a reason Adobe is working so hard to bring Flash to the desktop and Microsoft continues to invest a significant amount of R&D in desktop technologies in conjunction with services.

Now don't get me wrong - we get the concept of services.  XBox Live was the fastest growing subscription service in history.  We're making huge investments in other aspects of our Live platform (Search, Office Live, Windows Live, Live Messenger, Spaces, Live Local, etc.) but our services are not a bet on the future.  Those services have fantastic potential because of their ability to operate online while integrating with other powerful software.

- Paul