Longhaul flights are sometimes useful in that they allow one to ruminate over some of the issues that the daily deluge of data doesn’t allow. On this partiuclar flight I’ve been ruminating over a post I read recently from Yobie Benjamin. In the post he interviewed the CEO of SugarCRM, Larry Augustin. The gist of the post was the assertion by Augustin that what he calls cloud computing is going to render traditional SaaS obsolete.

First some clarification – what Augustin is really saying is that IaaS will prove so compelling that it will force SaaS vendors to either move to IaaS or fall by the way side – in other words SaaS vendors with their own infrastructure will find it increasingly impossible to compete. In Augustin’s words;

Cloud computing is obsoleting SaaS as defined by SalesForce, NetSuite and similar single-vendor solutions. The distinction between SaaS and cloud computing is an important one. Cloud computing gives companies the ability to scale out computing resources on-demand. Rather than building data centers that can serve peak capacity for all of their applications, they can instead build data centers (private clouds) that serve the typical capacity of their mission-critical applications and then overflow to external clouds as necessary.

But to support this, applications must understand the cloud computing model and be able to scale across internal (private) and external clouds.

The next big opportunity is around interoperability and portability across the many cloud services out there (Amazon, Google, Rackspace, etc.) so customers can consume services without fear of lock-in and the high costs of being dependent on one vendor. This is where legacy multi-tenant SaaS applications like SalesForce begin to fail. They run in only the vendor's data centers, not across public and private clouds. They are unable to take advantage of cloud computing.

This assertion would seem, at face value and somewhat unintentionally, to be backed up by a slide that Phil Wainewright used in a recent Whitepaper, Redefining software platforms — How PaaS changes the game for ISVs (the writing of which, by way of disclosure for both Phil and myself, was supported by the Intuit Partner Platform who is a client of both of ours). The diagram (see below) shows the increasing duplication of infrastructure, and hence increasing inefficiency as one moves from shared infrastructure, to dedicated SaaS and through to on-premise.

It’s a powerful diagram and one which, by extension supports Augustin’s contention.

Jumping into the sphere of the discussion, if a little peripherally, comes a survey from Avanade. Hat tip to GigaOm for finding it and making the comment that the survey found that;

By a ratio of 4:1 (2:1 on a worldwide basis), respondents said they would prefer to have their applications delivered as services from internal platforms. Is SaaS the “killer app” for internal clouds?

But I came away wondering if Augustin was looking at the issue completely as a binary argument, when clearly it is not. It’s a reasonably well accepted, if seldom mentioned, fact among the clouderati that large SaaS vendors often offer their products to large enterprise customers as “private SaaS” that is SaaS applications installed on private datacenters where organizations can feel better about their qualms over security, reliability and all the other barriers corporate IT puts up to justify apprehension about SaaS.

So like many of these things, it’s very much a question of horses for courses. In the same way that Augustin’s own product, SugarCRM is available on-premise, via IaaS or any combination of the above, so to will other vendors slice and dice their products to meet the particular requirements of their customer base. For the SMB set, much more important than the on-premise/on-demand debate is the ability to utilize web apps with their existing workflows and product choices – this is where offerings like the IPP with it’s built in connection to QuickBooks on the desktop comes in. For larger customers the imperatives are different, security and reliability are top concern and, whether rightly or wrongly, their perception is that internal infrastructure gives them the best results over these metrics.

So the takeaway here is one of flexibility – as an industry, and given the nascent nature of cloud computing and it’s triumvirate of categories - IaaS, PaaS and SaaS – we do ourselves a disservice by being too dogmatic about these things.