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[Nvyseal]

Software as a service (SaaS) -- or on-demand software -- is coming on fast as the Next Big Thing, delivering pay-as-you-use applications over the Internet.

This may sound a lot like what applications service providers (ASPs) have been doing for years. But some key differences seem to be turning the lackluster business of outsourcing packaged applications into an incipient software revolution.

Microsoft, coming a little late to the SaaS party, has now jumped into the pool with a characteristic big splash. Business Week Online recently quoted an internal memo from chairman Bill Gates: "This coming 'services wave' will be very disruptive…. Services designed to scale to tens or hundreds of millions will dramatically change the nature and cost of solutions deliverable to enterprises or small businesses."

So what is it that makes SaaS so different and revolutionary? Basically, it's a new purchasing scheme that shifts how software is issued: Buy services -- that is, aspects of business logic and code -- not packages, which have traditionally bundled a lot of key related functions.

Read up on SaaS

To me, im a little worried about this, What if the Software company fails? Where is your data?

What are your thoughts?

[m.oreilly]

i don't like it atm...too distant. i like my stuff in front of me, and yeah, what if the "company" fails? and i'm not sure re: "large, established companies can move downmarket and capture revenue from the small and medium sized businesses that may not have been previously able to afford the investment necessary to acquire perpetual licenses. In turn, smaller software companies and newer entrants that are exclusively delivering SaaS can more effectively compete with the larger vendors."